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Desal Claims in the UK: A Complete Guide
In the United Kingdom, consumer rights and tax regulations are designed to ensure fairness and transparency. One such aspect involves Desal Claims, which relate to the reimbursement or relief of VAT or duty paid on goods and services, often involving exports or business-related travel. If you are a business or individual who qualifies, understanding how to process a Desal Claim properly can save you significant amounts of money and ensure compliance with HMRC regulations.
In this article, we will explore what a Desal Claim is, who qualifies, and how you can return or reclaim your Desal Claim in the UK.
What is a Desal Claim in the UK?
Desal Claim is a term sometimes informally used to refer to the “VAT reclaim process for non-UK or overseas businesses” or the refund of VAT paid on goods/services that are exported from the UK. While “Desal” isn’t a formal HMRC term, it is often used colloquially to describe VAT reclaims on goods that have been “de-supplied” from the UK (i.e., exported or removed from supply).
There are primarily two types of Desal Claims:
- Overseas VAT Refunds (13th Directive Claims): This applies when a foreign business (not established in the UK or EU) pays VAT on goods/services in the UK and seeks a refund.
- VAT Reclaim on Exported Goods: When a UK business or individual exports goods outside the UK, they can reclaim VAT charged on those goods, depending on circumstances.
Essentially, a Desal Claim allows the reclaim of VAT under specific criteria – particularly when goods are no longer being consumed in the UK but exported or removed from the VAT system.
Who Can Qualify for a Desal Claim?
The eligibility to make a Desal Claim depends on your residency status, business type, and the nature of your purchases. Here’s how it breaks down:
1. Overseas Businesses (Non-UK and Non-EU Residents)
- Eligibility: Businesses not established in the UK or EU but have incurred UK VAT on goods and services related to business activities can claim.
- Example: A Canadian tech firm sends employees to the UK for a conference and pays VAT on hotel stays and transport. This VAT can be reclaimed.
2. Tourists (Non-UK Residents)
- Eligibility: Tourists who buy goods in the UK and take them back to their home country may qualify under the VAT Retail Export Scheme (which has been limited post-Brexit).
- Important Note: The VAT Retail Export Scheme was abolished from January 1, 2021, for sales in Great Britain, so individual tourists may no longer reclaim VAT through retailers unless special arrangements apply in Northern Ireland.
3. UK Businesses Exporting Goods
- Eligibility: If a UK VAT-registered business exports goods outside the UK, VAT may not be chargeable at the point of sale (zero-rated exports). However, if VAT was mistakenly charged, it may be reclaimed via a Desal Claim.
- Conditions: Proof of export must be retained, such as commercial invoices, shipping documents, and customs declarations.
What Purchases Qualify for a Desal Claim?
A Desal Claim typically applies to VAT incurred on:
- Business-related travel expenses (e.g., hotels, transport, meals)
- Purchase of goods intended for export
- Conference or training costs
- Professional services (subject to conditions)
- Equipment or tools used temporarily in the UK
Some items that do not qualify include:
- Goods consumed in the UK
- Passenger cars (with exceptions)
- Services used within the UK
- Entertainment expenses
Always check the latest HMRC guidance or consult a tax advisor for a comprehensive list.
How to Return or Reclaim a Desal Claim
Reclaiming a Desal Claim involves a structured process. Below is a step-by-step breakdown:
Step 1: Determine the Correct Scheme
Depending on your status (non-UK business, UK exporter, etc.), select the right VAT refund scheme:
- 13th Directive: For non-EU businesses claiming VAT in the UK.
- UK VAT Returns: For UK businesses claiming adjustments via their VAT return form.
- Retail Export Scheme (Limited Use): For individual non-residents – primarily through third-party refund companies if applicable in Northern Ireland.
Step 2: Collect Necessary Documentation
You will need to gather:
- Original VAT invoices or receipts
- Proof of payment
- Proof of business connection (in case of business claims)
- Proof of export (e.g., bills of lading, airway bills, export declarations)
Ensure all documents are valid, original, and translated into English if needed.
Step 3: Fill the Appropriate Claim Form
You can file a Desal Claim using:
- VAT65A: For non-UK businesses under the 13th Directive
- VAT100: For UK VAT-registered businesses (via the VAT return)
- VAT refund portals: Some countries use online portals or third-party services to process claims
Step 4: Submit to HMRC
Send your completed form and all supporting documents to:
HM Revenue and Customs
VAT Overseas Repayment Unit
8th Floor
Alexander House
Victoria Avenue
Southend-on-Sea
SS99 1BD
United Kingdom
Ensure submission is within the deadline:
Claims must be submitted within 6 months of the end of the prescribed year (calendar year), i.e., by June 30 of the following year.
Step 5: Wait for Processing
HMRC typically takes 3 to 6 months to process the claim. If approved, the VAT refund will be sent via bank transfer or international payment.
Common Mistakes to Avoid
- Missing or incorrect invoices: Claims without valid VAT invoices are rejected.
- Lack of proof of export: For export-related reclaims, shipping documents are essential.
- Late submission: Strict deadlines mean late applications are usually refused.
- Claiming ineligible expenses: Not all expenses qualify – always check before submitting.
Desal Claim in Northern Ireland
Following the Northern Ireland Protocol, special VAT rules apply in Northern Ireland. EU VAT refund rules (8th Directive) still apply there for EU businesses, unlike the rest of the UK. This means if you operate in or through Northern Ireland, the Desal Claim process may differ, and you may need to use a separate claim route.
Final Thoughts
Understanding and managing a Desal Claim correctly can provide financial relief and support smooth cross-border business operations. While the terminology might vary, the core idea remains the same: reclaim VAT where goods or services are ultimately not consumed within the UK.