Online cross-border VAT refund system introduced

With the aim of modernising the VAT system for cross-border trading, a new electronic VAT refund system will go live across the EU on 1 January 2010. 

The replacement of the previous paper-based system for cross-border refunds is just one of a number of measures being introduced in 2010, some of which will help simplify VAT administration while others will add to companies' compliance burden. 

Under the new system, claimants will have an extended period of nine months (from the current six months) to submit claims for VAT incurred in the previous calendar year. Claims made by UK businesses will be sent to the Member State of Refund (MSR) by HMRC, eliminating the need for the business to obtain a VAT certificate of status.

Further benefits

The online system will provide companies with a progress report on refund claims at certain key stages. There will also be standard minimum limits for claims in every Member State. If the MSR refuses a claim, in whole or in part, it will be possible to appeal against the decision.

We believe businesses will, on the whole, welcome the changes to the cross-border VAT refund procedures, enabling them to benefit from reduced paperwork and the deadline extension to nine months. If you need further advice, please contact Littlejohn VAT partner Bob Jones on 020 7516 2295 or email rjones@littlejohnllp.com