How long does an HMRC VAT refund take?

15 Jan 2024
Olga Danilova

Product Manager

Understanding the HMRC VAT repayment timeline is crucial for businesses managing their financial planning and tax obligations. Navigate VAT refund delays and find out if you can receive yours 75% faster.

If your VAT-registered business has paid more VAT on purchases than it has collected from sales, you can claim this difference back from HM Revenue & Customs (HMRC) after submitting your returns.

HMRC VAT repayment delay

Yet, while HMRC aims to reimburse this amount to businesses within five days, VAT repayment delays aren’t uncommon. You may face a wait of up to 30 days for your refund and sometimes far longer than that.

But with Adsum’s InstantVAT Refunds service, we’ll advance these funds to you within 60 minutes, saving you from an anxious period of financial instability.

For those who would just like to learn more about VAT repayment delays, let’s dive into why exactly HMRC can take so long to process these refunds.

InstantVAT Refunds

Why is my VAT refund taking so long?

The most common reason for an HMRC VAT repayment delay is that a business’s VAT return triggers an investigation.

Unfortunately, any refund won’t be paid until the investigation is complete. There are a few issues that tend to prompt an investigation, including:

  • The repayment amount is particularly high
  • The VAT return is a business’s first
  • Errors in the VAT return

That said, issues like stretched resources or an error from HMRC’s side can also lead to VAT repayment delays.

How long does a VAT refund investigation take?

After a VAT return is submitted, HMRC has 30 days to investigate it before processing the return and sending any refunds due.

However, an error in the VAT return halts this process altogether and further extends the overall waiting period, as HMRC won’t continue investigating or processing the return until it is satisfied that it’s correct.

How can businesses avoid VAT repayment investigations?

One way to potentially reduce the possibility of there being an investigation — or at least speed up the process if there is one — is to submit evidence alongside your VAT return, such as invoices and the reason for the claim.

This helps to preempt any enquiries.

It almost goes without saying but, like with any sort of tax return, accuracy is extremely crucial too. Not only will submitting an accurate VAT return increase the chances of a faster VAT repayment, but ensure businesses like yours avoid a financial penalty. This could be up to 30% of the extra tax due for correcting the error, assuming it isn’t deliberate.

Why are new businesses more vulnerable to repayment delays?

Firstly, startups are more likely to claim VAT refunds than other businesses due to set-up costs like property purchases and investments in fixtures, fittings and equipment.

HMRC tends to examine such transactions very carefully to ensure the right amount of tax has been paid, which can delay VAT refunds.

In addition, minor issues like HMRC not having a company’s bank details are more likely to affect newer organisations. In such a scenario, HMRC would issue a payable order, something that can take up to ten days to credit a company’s bank account with the repayment.

How quickly can you claim the VAT back?

While claiming VAT back can take up to 30 days ordinarily, by using Adsum’s InstantVAT Refund service, businesses can receive these funds 75% faster.

Charging just 2% of the refund amount, we give companies complete financial certainty at all times of the tax year, with our simple and quick-to-use InstantVAT Refund service. Here’s how it works:

  1. Create an Adsum account. Signing up takes just a few minutes — enter your details, let us know where to send your VAT refund, and grant us access to your government gateway.
  2. Submit your VAT return. You or your accountant send off your VAT return as you normally would.
  3. Get your VAT refund as soon as HMRC verifies it – It is that simple.

Sign up for our InstantVAT Refunds service today and make HMRC VAT repayment delays a thing of the past.

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