VAT EU refund information released

Date: 1st December 2009

HM Revenue & Customs (HMRC) has provided an update on the new VAT refund system to be used by small businesses from January 1st 2010.

The tax authority is promoting the use of the online system, which will replace the current paper refund documents across the EU.

Enrolments and online authorisations for agents also began today (December 1st).

The process requires firms to provide some ID details and create a password in exchange for receiving a unique user ID.

HMRC will then send a mail confirmation of the registration, containing an activation code and a PIN, from which the authorisation of full client VAT details can be completed.

"Once you have requested online authorisation, HMRC will send your client a letter containing a unique authorisation code," HMRC added. "The two letters in front of the code show which service it's for - the code for VAT includes the letters 'VR'."

The launch date for the VAT refunds coincides with the increase of the sales tax to its old 17.5 per cent rate in the UK.

VAT is currently charged at 15 per cent, as part of the government's plans to stimulate consumer spending in the recession.

Posted by Emma Clarke