Any clients who have incurred VAT on business costs in other EU countries (typically hotel bills for a business trip) should try to reclaim these under the existing 8th Directive claim procedure, which is far simpler and faster than the future alternative.
Once the UK leaves the EU on 31 January 2020 (18 days to go), this claim procedure will end, as of 5pm on the 31st Jan.
8th Directive claims can be made for costs incurred in the year ending 31 December 2019.
This is a tight deadline, but it is possible to make a claim via the online HMRC portal. Claimants will need to complete an online form and submit scanned copies of the VAT invoices received. HMRC will confirm that they are valid claimants to the EU tax authorities. The invoices will need to be accurate/correct or will be rejected. Often claimants need to source re-issued invoices in advance of making the claim as this can delay matters. For example, hotels typically address their invoices/bills to individuals, not their businesses, and they are usually happy to change this if asked, but it takes time.
If you do have any clients in this position, please contact them as soon as possible.
Please also note that these claims can be time-consuming and often lead to more questions from the tax authority of the EU country you are claiming from. This increases our time costs and means realistically only larger amounts are economically worthwhile for us to process and claim, but we can advise clients on how to make their own claims, if these are smaller, as a goodwill gesture.
Going forward post-Brexit, as a non-EU country we will be able to claim under the 13th Directive mechanism (assuming the UK agrees reciprocity with the EU countries!). This is a paper-based claim involving longer delays and the need to submit longer paper forms in the local language with original paper invoices and a certificate proving the claimant is a registered business, direct to the individual EU country tax authorities. The latter certificate is the “Certificate of Status”, which here in the UK is a VAT66A – NB these are only valid for 12 months and must be renewed every year in time to make the claim (diarise October/November).
The claim period is the year from 1 July-30 June and the claim deadline is 31 December (realistically before Christmas). Given the work involved, only larger claims are economically viable for us to do, I suspect.
There are often follow up queries from the tax authorities for up to 6 months later and more work to get a claim home and dry.
If current claims are not made under the 8th Directive, there may be an issue trying to claim them under the future 13th Directive procedure given the overlapping periods and the EU country’s willingness or not to be helpful.