Getting a VAT Repayment

When you've reclaimed more VAT than you've charged your customers, HMRC will repay you the difference automatically when you submit your VAT Return. In most cases, you'll receive your repayment within 30 days, though HMRC may sometimes ask you to provide supporting information...

Getting a VAT Repayment

When you're entitled to a VAT repayment

You're entitled to a VAT repayment when you've paid out more VAT on your purchases than you've charged to your customers.

When you complete your VAT Return, Box 3 shows the total VAT you've charged and Box 4 shows the total VAT you've paid. If the figure in Box 3 is less than Box 4, you're due a repayment. The amount shown in Box 5 is what HMRC will repay you.

This commonly happens when:

You've made large purchases of equipment or stock
You make zero-rated sales (which are still VATable business activities, but charged at 0%)
Your business is just starting up
Your business imports or exports goods

How to claim your repayment

You don't need to do anything special to claim a VAT repayment. HMRC processes it automatically when you submit your VAT Return showing that you're owed money.

Your repayment will be paid directly into your bank account if you've provided HMRC with your bank details. If not, HMRC will send you a cheque (also known as a payable order).

You can change the bank details HMRC uses for your repayments through your account settings.

Supporting your VAT repayment claim

HMRC runs automated checks on all VAT Returns. Most repayment claims pass these checks and proceed immediately for payment.

However, HMRC may write or email asking you to send details to support your VAT repayment claim. You should only respond to this request if you've received a letter or email from HMRC specifically asking for supporting information. The letter will include a reference number beginning with CFS, CFSS or CFSRP.

What information you'll need to provide

If HMRC asks you to support your claim, you'll need to include:

Your VAT registration number
The CFS reference number from HMRC's letter or email
Details of your main business activities
The VAT rates that apply to your sales
Details of any VAT schemes you use (for example, the VAT Cash Accounting Scheme)
Your detailed VAT account
Your 10 highest value purchase invoices where VAT has been charged
Copies of original bank statements
Details of who filled in and submitted your VAT Return
Names of any software packages you use if you follow Making Tax Digital rules

Additional documents for specific situations

For your first VAT Return, you'll need evidence of VAT paid on goods and services received before VAT registration, including stock accounts showing descriptions, dates, quantities and amounts paid.

If your business trades internationally, include export sales invoices, supporting documents and import VAT documents.

For claims involving land or property, provide completion statements, land registration documents, evidence of payment and evidence of any land taxes paid.

If you supply construction services, include addresses and postcodes of construction sites plus any planning reference numbers.

You can also include any other supporting documents such as hire purchase agreements, lease agreements or sales invoices where non-standard VAT rates were charged.

How to submit your information

You'll need to use the online form and sign in with the details you used when you registered for VAT. If you're authorised to act as an agent for the business, use your agent user ID and password.

You can save your progress and return to the form later. If you need to send information about more than one VAT return period, you'll need to complete a separate form for each period.

HMRC aims to review the information you send within 7 working days and will contact you when they make a decision or if they need more information.

How long repayments take

HMRC usually makes repayments within 30 days of receiving your VAT Return.

You can track your VAT repayment online through your account. If you've not heard anything within 30 days of submitting your return, contact HMRC.

The 30-day period starts on the day HMRC receives your return. However, if you submit your return before the end of the accounting period, the 30-day period won't start until the end of that period.

Repayment interest when HMRC is late

If HMRC is late in paying your repayment, you may be entitled to repayment interest on any VAT you're owed. This applies to accounting periods starting on or after 1 January 2023.

How repayment interest is calculated

Repayment interest is paid at the Bank of England base rate minus 1%, with a minimum rate of 0.5%.

The interest is calculated on a daily basis from a start date until HMRC repays you or sets the amount off against other tax you owe.

When repayment interest starts

For VAT you've not yet paid to HMRC (shown as a credit on your return), interest starts on the day after whichever is later:

The due date for your VAT Return
The date you actually submitted your VAT Return

For VAT you've already paid to HMRC (such as overpayments or errors you're correcting), interest starts on the day after whichever is later:

When you paid the VAT to HMRC
The payment deadline for your accounting period

HMRC will not pay interest on early VAT payments.

When you won't receive repayment interest

Repayment interest is not paid on amounts you've paid in error. For example, if you paid £1,000 instead of £100, you wouldn't receive interest on the overpayment.

If you have overdue VAT Returns outstanding, repayment interest on a repayment return will only start when HMRC receives the last overdue return.

If HMRC asks you to pay a VAT security and you don't pay it, you won't receive repayment interest from the date HMRC notifies you until you pay the security.

Example of repayment interest calculation

A company submits their monthly VAT Return on 1 November showing a £10,000 credit. Their accounting period ended on 30 September, and the return was due on 7 November. HMRC pays them on 10 November.

The company is due repayment interest on £10,000 for 3 days (8 November to 10 November inclusive).

If the Bank of England base rate is 1%, the repayment interest rate would be 0.5%. The interest due would be 41 pence: (£10,000 × 0.5% × 3 ÷ 365 days).

Repayments to overseas bank accounts

You can only receive VAT repayments to an overseas bank account if your company:

Does not have a UK bank account and cannot get one
Does not have a UK address

The overseas bank account must be in the name of the company owed the repayment, be associated with a named business owner or authorised person, and be able to accept payments in pounds sterling.

You'll need to fill in an online form to provide your overseas bank account details before HMRC can transfer any repayments. All future VAT repayments will then be sent to this account.

If you need a replacement cheque

If your repayment cheque is lost or out of date, write to HMRC Payments at HM Revenue and Customs, BX9 1XD. Include your name, VAT reference number, address and contact number, and return any out of date or unused cheques.

You can also write to ask HMRC to send the repayment to your business tax account bank details instead, or to use the repayment to pay another tax you owe.

Sources

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.

Getting a VAT Repayment