HMRC has changed the UK VAT refund process for non-UK businesses that are members of VAT groups, allowing eligible businesses to submit claims for UK VAT they incurred themselves. Transitional rules will apply for the 2025 to 2026 prescribed year, while certain claims rejected since 1 January 2021 can be reconsidered until 31 August 2027.
The UK’s HM Revenue & Customs (HMRC) has updated the rules for UK VAT refunds claimed by non-UK businesses that are members of VAT groups, according to a policy paper issued on 8 September 2026.
Under the revised rules, non-UK VAT group members must submit their own claims for UK VAT they incurred. HMRC will no longer accept claims from a VAT group’s representative member unless that member incurred the VAT.
The overseas VAT refund scheme is available to non-UK businesses that meet certain conditions. Businesses must not be registered, liable or eligible to register for UK VAT, must not have a business establishment or other fixed establishment in the UK, and must not make supplies in the UK, subject to specified exceptions.
Before 1 January 2021, different rules applied to businesses belonging to VAT groups depending on whether they were established in the EU or outside the EU. From that date, all non-UK VAT group members were required to submit claims through the representative member. HMRC said this had resulted in some eligible businesses being unable to recover UK VAT and described the outcome as an unintended consequence of the UK’s exit from the EU.
For the 2025 to 2026 prescribed year, covering 1 July 2025 to 30 June 2026, HMRC will accept claims from either the individual VAT group member that incurred the VAT or the representative member. Claims for this period must be submitted by 31 December 2026.
HMRC will also reconsider claims for VAT incurred from 1 January 2021 that were rejected because the representative member did not submit the claim, provided the VAT was not included in a later claim by the representative member.
Businesses seeking reconsideration must contact HMRC’s Overseas Repayments Unit by email using the subject line ‘Reconsideration of a previously refused VAT group claim’. Requests must include the business name, unique reference and claim number, claim period and value, decision letter date, the names of all VAT group members during the claim period, and confirmation that the VAT was not included in a later claim.
Requests for reconsideration must be submitted by 31 August 2027. HMRC said requests received after that date would not be considered.
