New VAT cross-border refund procedure
HMRC have published further details on the new VAT refund procedure which will commence on 1 January 2010 and replace 8th Directive claims.
From 2010 it will be compulsory to use the new on-line system whereby claims will be submitted in the EU member state where the claimant is based. Thus businesses established in the UK will submit all claims via HMRC. Following basic checks, HMRC will electronically forward the claim to the relevant member state.
The new procedures also specify specific deadlines which include a four month processing time limit from the date of receipt of the claim by the Member State of Refund (MSR) and a further ten days to repay the claim. The processing time can be extended up to eight months where further information is required to process the claim. All member states that have not made payments within the specified time will be required to pay interest. Claimants will also receive updates on the progress of their refund claims at specific key stages of the process. The time limit for submitting claims will also increase from six months to nine months.
The 23 page document published by HMRC also includes a copy of the draft UK secondary legislation as well as a questions and answers guide which addresses issues including submitting claims for members of a VAT group, partial exemption and what language is to be used on refund claims.