How to offset and recover VAT

It is normal not to know how to offset and recover VAT once the deadline granted by the Tax Agency to request a refund has passed.

Some companies do not receive the appropriate tax advice and often discover it too late; sometimes, they do not even realize their mistake.

Others think that claiming what is owed to them can raise suspicions and cause the Treasury to review their company’s numbers against their interests. This is an imperfect solution since to improve a company’s tax savings, it must consider all the factors that influence the final results.

Did you know you can claim a VAT refund for the following four years?

Offsetting VAT

Sometimes, companies need more activity but must face a significant expense. It is logical but very inadvisable to decide not to claim VAT compensation if you think it may cause problems with the Tax Agency.

This means that you can go years without claiming, unaware that the law offers you four years to request compensation. The right thing to do would be not to exhaust the deadline and request VAT compensation before it is too late.

It is OK to request it two years later. It is a right that companies have; if they pay when they are due, it is fair to ask for their money back when the opposite is true.

VAT refund expires

It is essential to bear in mind that once the right to VAT compensation expires, the Tax Agency continues to offer the possibility of claiming the refund later.

Lack of knowledge means that many SMEs do not know there is the possibility of claiming once the deadline has passed. It is our job, and I want to make this information available so you can claim what is fair.

The Treasury knows that sometimes it will have to pay companies; it already has that in mind. Do not be afraid to claim what is yours. Not doing so can be fatal to the sustainability of your company.

Deadline to request a refund

The deadline for requesting a VAT refund is four years, and once the deadline has passed, you cannot continue including it in the following declarations.

Do not worry if you did not consider it; luckily, you can still claim it. The condition to be able to do so is that you continue to account for it while you do not make the claim.

Remember to note it each year as VAT pending compensation so there is an accounting record. You must refrain from doing so since you will incur an accounting error affecting your company’s accounting.

How to recover VAT

This point is the most important but must be done considering all the previous points. To recover VAT you must request the refund in writing and above all, stop declaring it as pending compensation.

The Treasury sets a condition that it is requested expressly and does not allow it to be done in the last annual self-assessment. It is vital to comply with the conditions because otherwise the Tax Agency could cause problems in managing your refund.

Expect to get your VAT back only if you have accounted for it in your company’s accounting. You must request it officially to be able to recover it.

Conclusions

If you are entitled to a refund, you can choose the best time to request it, but remember to request it before four years have passed, or you will lose the right to claim.

On the other hand, don’t forget to account for it every year so as not to make unwanted accounting errors.

Now, you know a little better the deadlines and possibilities that the Treasury offers to offset VAT. Remember that it is a right that you can exercise whenever necessary.