VAT Refunds

When operating a business or offering services and paying VAT, according to the rules and regulations, you might be in line to receive a VAT refund. There are several descriptions to comply with in order to file for a refund. Recently there has been a rash of fraudsters trying to bilk the Revenue Service of billions of pounds, so over 100 new HMRC workers have been hired to scrutinise the refund system. Make sure all of your records are up-to-date and accurate. Refunds can be strictly controlled and take several months to reach the rightful hands. There are many means of collecting a VAT refund, and the following shows some examples.

DIY Building Conversions

You might be able to claim any VAT or be exempt from paying for it if you are building a brand new home or converting a building into a home in which to live. It is also dependent on whether you do the conversion yourself or hire a contractor and whether or not you paid VAT for the supplies to do the building.

Construction Of A Brand New Home

This scheme applies to the construction of a new home in which you and your family intend to live when it is completed. The work must be done in the UK, including the Isle of Man, and the building must not be used for business purposes. It has to be self-contained so a granny flat cannot be included under this premise.

Finishing A Building

If you are adding onto or finishing up a building which someone else started but left as a shell, then you can make a claim for the VAT. For instance, if a developer in a subdivision ran out of time or money and left a home partly built, you can buy it from him and finish up the construction or hire another contractor. Under this scheme, it does not include adding on an extra garage, conservatory or patio.


When undertaking a conversion it must start with a non-residential building. It must never have been lived in before or at least for the last ten years. You can move in while the work is being done, as long as the work started before you moved in. You can possibly claim the VAT refund if the conversion is to be used as a communal building such as a retirement senior citizen’s home or a charity building. This scheme will work as long as the conversion is not used as a business for the purpose of an income.

Who Can Claim A VAT Refund

You can claim the VAT refund if you bought eligible goods for this building project and it does not matter if you or a contractor completed the job or not.

Who May Not Claim A Refund

Those people who use the building for a business may not claim the VAT refund. This list includes a fee-charging day-care centre, senior citizen’s residential home, bed and breakfast, landlord, fee-charging school or training centre, or for a membership club. However, if you work from home and use one room as your office then you can make a claim for that portion of the VAT supplies.

Furthermore, you cannot file for a refund for furniture, carpeting and other decorations for the new building. The supplies have to be specified as truly building materials. You also may not declare the VAT if you used an architect or a designer for your project and were charged VAT. So it is best to find out the specifics of your claim before submission. Otherwise you may be held up in having it returned to you and facing further consequences.

VAT Refunds For International Travellers

If a visitor from outside of the UK and the EU was to visit for a personal reason, he or she could claim the VAT paid on any products purchased while staying in the UK. Upon leaving the UK, you must prove that you live outside of the EU, are leaving the UK with the goods you bought by the end of the 3rd month when you purchased them and show the goods and their receipts along with a VAT refund document, already completed. For a higher costing item, like a fur coat or a piece of jewellery, where the VAT would be a sizeable amount, this would be a worthwhile exercise.

If you live in the EU, you must prove that you are not returning to the EU for twelve months and then follow the steps as above. If you are a student studying in the UK, the same rules apply. You must stay out of the EU for 12 months, show your receipts and goods, and have a refund claim already completed. This hopefully cuts down on people trading goods back and forth between countries and claiming a refund.

VAT Not Claimed For The Following

This list includes new or used cars, a sailing boat, goods worth over £600, goods to be exported as freight, products which require an export licence and unfinished gems. Further to that list, bullion over 125g, mail-order goods bought on the internet, perfume and service charges from hotel expenses.

How To Claim The VAT?

First of all, when making a substantial purchase, find a retailer which supports the VAT Export Retail Scheme. Ask the merchant to provide you with the 407 form indicating the VAT paid separately on the receipt. The merchant may ask to see your documents such as a passport to validate that you are visiting. Make sure that the date, amount and VAT are clearly marked on the form and it is signed.

According to a trip advisor, make sure that your refund forms are stapled to your receipts, have them handy when you arrive at the airport, and arrive early. Go to the customs area first, before even checking in as the queues are long and each claim has to be checked. While doing your shopping, keep all of your receipts in a separate compartment of your wallet or handbag, go with them to the same store if you have saved them up and ask for a customer service person to fill out the form. This will save on separate forms also.