Dec 28, 2022
4 min read

Help reclaim business VAT with automated expense management

Trish Toovey - Content Director at Payhawk - The financial system of tomorrowTrish Toovey
Accountant reconciling business receipt manually instead of opting out for Payhawk's automated expense management solution
Quick summary

You could be eligible for VAT recovery from HMRC via quarterly or monthly returns as a business enterprise. But without the right resources to reclaim that money back, you might be losing out on some valuable funds.

Table of Contents

    When it comes to your business, every penny counts. And despite your best efforts to save on expenses and increase profits, there's a good chance you're missing out on one major source of money: VAT recovery.

    Not all businesses fully understand how to maximise their savings with VAT recovery. For many SMEs, VAT recovery is often perceived as a demanding process that requires a lot of paperwork and time spent filling out forms. While for enterprise businesses, it can be too challenging to reconcile 1000s of receipts and trace missing documents.

    The good news is that with the help of smart expense management software, you can recover VAT on many of your company's expenses.

    MDM Props saves €1000s with expense categorisation and reconciliation

    What is a VAT reclaim?

    VAT stands for value-added tax; a consumption tax levied on goods or services at each stage of production or distribution. It's paid by both consumers and businesses who buy or sell products within the UK and European Union (EU). The percentage you pay depends on where you live and where you are buying from/selling.

    A VAT reclaim, however, (also called 'VAT recovery' or 'VAT refund') is the amount of VAT you're eligible to claim back on your business expenses. The government will refund this money to businesses that can show that the goods or services are being used in business activity.

    What kinds of expenses qualify for a VAT reclaim?

    VAT reclaims can be a great way to save money on your business expenses. Most items you buy across different parts of Europe are subject to VAT, including many goods and services. As a business enterprise, you can receive VAT refunds on many expense categories, such as:

    • Meals and drinks purchased while on business trips
    • Business travel costs
    • Work-related accommodation
    • Taxis, buses, and subway/metro costs
    • Car rental costs for company use
    • Phone and internet charges

    Rightly due VAT recovery from company expense tickets and receipts

    Without the right tools, VAT reclaim can be a tedious process and a pain in the neck for many businesses. And because of this, many companies would rather write VAT off as an expense than allocate resources to recover their rightful funds. This is where Payhawk comes in. With the Payhawk expense management solution, you can correctly categorise your receipts to claim back money via VAT refunds.

    Payhawk’s expense management solution is designed to help businesses easily track spending to take advantage of valuable refunds and savings. Here are some key benefits:

    1. You can ensure all receipts and invoices are correctly reconciled using the Payhawk solution. Once a card user pays with the Payhawk card, they simply need to take a photo of the receipt, and the OCR tech automatically pulls out all the data in the Payhawk app. The user then needs to select a category for the spend (from the categories that the finance team will have created) and job done.
    2. You don't need to hire a team of accountants or spend hours researching how to submit your expense claims correctly every month. At Payhawk, our software does this work for you.
    3. You don't have to worry about missing any important dates or chasing receipts because the software notifies you in advance so that you can keep track of everything easily.

    Finding money-saving opportunities

    Payhawk's expense management automation solution lets you track and manage all business expenses, making it easy to claim back any VAT that you have paid.

    Take the German-based business ATU, for example. The chain of auto workshops and retail stores, with more than €1 billion in annual sales and over 10,000 employees, moved to Payhawk three years ago. In the first year alone, the company managed to recoup approximately €2 million in VAT tax claims by correctly recording and categorising their receipts.

    In addition to these savings, automating the process has had a dramatic effect on the finance department's morale and productivity. "Payhawk is the solution we've been looking for. We're reducing cash expenses to zero and creating a highly flexible, secure, and transparent working environment," Sebastian Jarankowski, Finance Director at ATU explained.

    Integrating with 60dias to help businesses reclaim VAT

    We also integrate with VAT recovery company 60dias. Our partnership allows us to bring together two complementary solutions (VAT recovery, including on backdated receipts, plus expense management) that help businesses reduce costs without losing productivity.

    The impact of VAT reclaim on a company's treasury can be huge. "Not only that, but the recovery of VAT can be retroactive for a period of up to four years in some cases," explained Sergio Pérez Vegas, technical managing partner (and tax inspector on leave specialising in VAT) at 60dias. "Meaning you can recover VAT on receipts from two years ago but feel the benefit before this year-end."

    Support your VAT reclaims

    The UK and EU markets are designed to allow companies to reclaim the tax they have paid on goods and services. If you've been paying VAT on your business expenses, you're more than likely entitled to receive a refund when you file your quarterly VAT return.

    But how can you make sure you're getting all the benefits? Start by automating your expense management so you can accurately categorise your receipts, get easy invoice reconciliation, and claim back any VAT you're missing.

    Learn how to support VAT reclaims on your company's expenses with Payhawk’s cards, software, and integrations. Book a demo today.

    Trish Toovey - Content Director at Payhawk - The financial system of tomorrow
    Trish Toovey
    Senior Content Manager

    Trish Toovey works across the UK and US markets to craft content at Payhawk. Covering anything from ad copy to video scripting, Trish leans on a super varied background in copy and content creation for the finance, fashion, and travel industries.

    See all articles by Trish →
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