Monthly Archives: November 2026

Most VAT incurred overseas not claimed

By   3 November 2026
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The OECD estimates that around 50% of businesses fail to reclaim any foreign VAT or leave significant portions (up to 73% in certain cases) unclaimed. It represents an actual cost to a business and the mechanisms in place to recover this VAT are not as tortuous as they once were.

So why do businesses miss claiming this VAT?

It could be down to a simple lack of awareness: Many small-to-medium enterprises (SMEs) do not realise they are legally entitled to recover VAT incurred on such items as: business travel, accommodation, or conferences in overseas countries.

In addition, there is perceived administrative complexity: This VAT cannot be claimed on a businesses’ domestic VAT return. Different countries enforce separate refund procedures (such as the EU’s 13th Directive or UK Notice 723A).

There are also strict non-negotiable deadlines and thresholds: Most countries impose rigid filing cutoffs (eg; December 31 for UK and many EU-related claims) and minimum claim amounts.

There are significant ineligible expenses. Common rejections occur because businesses attempt to claim blocked expenses like client entertainment, non-business car hire, or VAT attributable to exempt supplies.

Perhaps the biggest reason for not claiming is that ‘it’s not worth it!’

Tips

  • record all VAT incurred
  • determine if the value threshold is met (each country has a set minimum claim, but it is mainly around the €50 pa figure).
  • ensure valid invoices are obtained and retained
  • obtain a certificate of status
  • monitor timing
  • check the relevant deadline for the country and submit a claim in time (deadlines are not standard and vary country to country. However, they are mainly 30 June or 30 September, and the claims are on a calendar year basis)

It is possible to arrange for an agent to make a claim on a business’ behalf. 

More on GB businesses claiming overseas VAT here and on overseas businesses claiming in GB here.

VAT: Updated guidance for charities

By   3 November 2026
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HMRC has updated its guidance: How VAT affects charities (VAT Notice 701/1). The Notice explains what a charity is for VAT purposes, how VAT affects charities, how to treat a charity’s income for VAT and what VAT reliefs a charity can get on what it buys.

A guide for charities and VAT here.

The changes are in respect of: ‘Charity acting as an agent’ within section 10 (Charity challenge events) which has been updated to show the correct rate of VAT due from the charity as output tax.

These Charity challenge events are increasingly common – Many charities offer, or encourage participation in, challenge events as a way of raising funds. Challenge events often test participants’ physical and mental endurance, and common examples include climbing mountains and cycling or trekking through inhospitable landscapes. Many charities set a target figure that participants should aim to raise through sponsorship.

VAT: Updated guidance for DIY Housebuilders

By   3 November 2026
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HMRC’s guidance: VAT refunds for new builds if you are a DIY housebuilder which explains if a person can claim a VAT refund using the DIY housebuilders scheme when they are building a new house has been updated.

The section ‘Claims rejected or not paid in full’ has been updated with what to do if you think HMRC has missed key information or misunderstood something in your claim.

The options are:

  • send HMRC more information
  • ask for a review
  • appeal to a tribunal

The DIY housebuilders’ scheme overview

You will not be charged VAT if you buy a new house from a property developer – because the sale of the house is be zero-rated.

If you build a house yourself, you will not benefit from this zero-rating.

The DIY housebuilders’ scheme allows you to claim back VAT incurred on building materials you have bought. This is similar to buying a new house at the zero rate.

More on the scheme here and Top Ten Tips here.