executives’ expenses,” says David Vine, senior director at travel- expense software provider Concur. “But without doubt they should. Given the sums of money they could make for their companies, it is not good enough for them just to leave it to procurement or to ignore it.” The sums involved are startling. In the UK alone in 2011, £124 million of VAT on mileage was left unclaimed by businesses. Imagine how much that sum would increase if we factored in all the other travel expenses executives claim for – and all the EU countries (plus a handful of other countries) with which the UK has reciprocal VAT reclaim treaties. It’s hardly surprising the authorities are unenthusiastic about revealing exactly how much all this adds up to, but Derek O’Brien, group head of marketing at VAT reclaim specialist Meridian Global Services, estimates that within the EU there is €5 billion of unrecovered VAT each year (you can roughly work out the amount you could claim back by working out 20 per cent of the expenses you pay). Adam O’Kane, co-founder of
C
expenses app ExpenseMagic, says: “Estimates vary, but most agree that companies can save 6 per cent on their travel bill just by maximising their VAT recovery. But the European Commission estimates more than half of all major corporations fail to recover VAT properly.” Partly, this is because it is difficult
to do, but in many cases it is because not everyone is aware it is even possible. So, where can travel managers turn for help?
HMRC’S NEW SYSTEM In 2010 HM Revenue & Customs (HMRC) took a major step forward to help companies reclaim VAT from the EU. Whereas previously it had been necessary to collect forms from each individual country and send them, together with receipts, by post, in 2010 HMRC launched an online system that
28 Buying Business Travel 2012
orporate travel managers don’t see it as part of their jobs to recover VAT [value-added tax] on
Trimming the VAT
Experts say many companies are not making the most of claiming back VAT on their travel expenses – and this neglect is costing them millions. Alex Blyth reports
allows companies to file returns and receipts electronically. Scott Craig, partner at accountancy
firm Scott-Moncrieff, says: “Applications must be submitted to HMRC at the latest by September 30 of the calendar year following the refund year. HMRC will then forward the claim on your behalf to the relevant EC tax authority. It is a standard online form, but bear in mind a separate online application is required for each member state from which you claim.” In theory it is simple; in practice it is anything but. Because VAT rates vary across the EU, it is complex to work out what is due to you, and is further complicated by varying
rules on what you can claim for, and on what evidence of purchase is required. For example, in many countries VAT on alcoholic drinks cannot be reclaimed so you need to separate that out from the meal itself. In Germany you must have your company name and address on the receipt or it is not eligible. In the Netherlands, for public transport claims, the receipt is not necessary as long as you have the ticket. Accountancy firm Chantrey Vellacott DKF has set up a service specifically to guide clients through this VAT reclaim process. Its VAT consultant Lisa Hagerty says: “We can take on all the hard work of sorting through expenses and submitting the right