Commentary

V5.152 VAT refunds to overseas traders for VAT incurred in the UK; tax refunds to UK businesses for tax incurred overseas

Part V5 Compliance, enforcement and appeals

V5.152 VAT refunds to overseas traders for VAT incurred in the UK; tax refunds to UK businesses for tax incurred overseas

V5.152 VAT refunds to overseas traders for VAT incurred in the UK; tax refunds to UK businesses for tax incurred overseas

VAT refunds to overseas traders for VAT incurred in the UK

SI 1995/25181 contains provisions for the repayment of VAT to traders established outside the UK2 other than in respect of goods obtained in Northern Ireland by EU businesses (for which see V5.151A above). These provisions are implemented in the UK by VATA 1994, s 39 and regulations3 made thereunder.

Persons eligible for repayment of VAT

A person carrying on a business (ie a 'trader') is eligible for repayment of tax during a claim period if he meets the following conditions.

Firstly, he must be established in a country outside the UK4. A person is treated as being established in such a country if5:

  1.  

    •     he has a business establishment there

  2.  

    •     he carries on a business through a branch or agency there

  3.  

    •     he has no business establishment there or elsewhere but his permanent address is there, or

  4.  

    •     he has no business establishment there or elsewhere but his usual place of residence is there

The usual place of residence of a body corporate is the place where it is legally constituted6.

Secondly, where the third country has a comparable system of turnover taxes, it may be required to provide reciprocal arrangements for refunds to taxable persons established in the UK (however, HMRC may waive this requirement7).

Thirdly, the person must not make supplies of goods or services in the UK or, if he

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