Are you due a VAT refund?

If the VAT on your purchases exceeds the VAT you have charged on your sales during the VAT period your VAT return will show a refund of VAT due from HMRC.  

If this is an unusual occurrence for your business you may find that HMRC will want to check your VAT return before they authorise the repayment.  HMRC will usually contact you by phone and ask you to supply a copy of the largest purchase invoices to support the reclaim.  If they are not satisfied with this they may ask for additional information from your return or they may decide to arrange a visit to check your records.

If a VAT repayment is unusual for you, particularly a very lage one, it can be advisable to write to HMRC and let them know why you are submitting a repayment return.  A repayment may occur because you have purchased a commercial property, have done some major building work on your premises, or perhaps you have just started in business and have significant set up costs before your sales start.

Whatever the reason HMRC want to be sure the repayment is correct.  Repayments are usually made within 10 days of the return being submitted but if you haven't heard anything by 21 days after submission you are advised to contact them.  However HMRC do have up to 30 days from the day they receive your VAT return to make the repayment but this does not include the days taken to check and verify your VAT return.  If you submit your VAT return before the end of the accounting period it covers the 30 days will only start from the end of the accounting period.

If HMRC delay repaying VAT due to you you can claim compensation - £50 or 5% of the amount due, whichever is the higher.  You won't get this compensation though if you have other returns outstanding, your returns have been late or you made an error on the return.

So if you submit a repayment VAT return be prepared to provide the information HMRC require to verify that it is an accurate return, but don't provide any more information than they ask you for.