HMRC updates electronic submission guidance for overseas VAT refunds

Summary

• HMRC updated VAT Notice 723A on 30 October 2026, including information in section 2.10 on submitting an electronic claim. The notice explains how businesses established outside the UK may reclaim qualifying UK VAT when they are not registered, liable or eligible to register for UK VAT and meet the scheme’s other conditions.
• The refund scheme may cover UK VAT on qualifying imports and purchases of goods or services used in the UK. Eligibility remains conditional: the claimant must generally have no UK establishment and must not make disqualifying UK supplies. Reciprocity, supporting evidence, claim periods and deadlines must also be reviewed before submission.
• Businesses should update refund procedures and third-party instructions against the current HMRC notice, rather than relying on older process descriptions. Controls should cover claimant eligibility, electronic submission, certificates of status, invoice and import evidence, recoverability restrictions, deadline monitoring and retention of a complete audit trail for each claim.

Extended article

HMRC has updated VAT Notice 723A, the guidance governing refunds of UK VAT for businesses established outside the UK. The 30 October 2026 update specifically concerns information about submitting an electronic claim in section 2.10. The notice remains the central operational source for overseas businesses seeking recovery of qualifying UK VAT outside the normal UK VAT return mechanism.

The scheme is available only where the statutory and administrative conditions are met. A claimant must be established for business purposes outside the UK, must generally not be UK VAT registered or liable or eligible to register, and must not have a UK establishment or make supplies that prevent use of the refund mechanism. The notice also explains the relevance of reciprocal treatment and the categories of expenditure that may or may not be recoverable.

The update is a reminder that refund compliance is process-sensitive. A technically recoverable expense can still be rejected if the claimant uses an outdated submission route, misses a deadline or cannot provide the required evidence. Multinational groups should therefore maintain a country-specific procedure for UK refunds rather than treating them as an extension of EU refund claims.

A robust control should identify eligible entities, assign responsibility for electronic submission, validate invoices and import documents, check business-use and blocked-cost restrictions, and preserve certificates and correspondence. Where an external refund agent is used, the engagement instructions and evidence checklist should be refreshed against the current notice. Claims in progress should be checked for consistency with the revised electronic-submission guidance.

External references: HMRC VAT Notice 723A

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Other articles

United Kingdom Strengthens Controls for VAT126 Refund Claims

Summary 

• The UK will create enabling powers for secondary legislation governing VAT126 refund claims by specified non-VAT-registered bodies. The affected categories include local authorities, academies, qualifying museums and galleries, and certain palliative-care, air-ambulance, search-and-rescue and medical-courier charities recovering VAT under sections 33 to 33E of the VAT Act 1994. Further implementation. 

• The powers are intended to align VAT126 administration more closely with refund claims submitted by VAT-registered bodies. Future regulations may allow HMRC to assess amounts already refunded and may establish appeal rights concerning decisions on claims. The October measure creates the legal framework; detailed operative procedures depend on subsequent secondary. 

• Eligible organisations should strengthen invoice evidence, eligibility analysis, claim reconciliations, approval trails and correction procedures. Source documents should demonstrate supplier, customer, VAT amount and qualifying activity. Governance should also identify business, non-business and restricted costs, maintain links between claims and ledgers, and support responses to HMRC enquiries or assessments. Further. 

Extended article 

The UK government will amend the VAT Act 1994 to permit secondary legislation dealing with VAT refunds claimed through form VAT126. The measure applies to specified bodies that are not VAT registered but can recover VAT under sections 33 to 33E. These include local authorities, academies, listed museums and galleries, and defined charities providing palliative care, air ambulance, search and rescue or medical courier services. HMRC describes the objective as bringing the administration of VAT126 claims closer to claims made by VAT-registered bodies under the same statutory provisions. The enabling power may support assessments for amounts already refunded and appeal 

rights in relation to HMRC decisions. The policy paper does not itself set every operational rule; those details require secondary legislation. The change matters because refund entitlement and claim administration are distinct. A body may fall within an eligible statutory category but still need to show that each amount claimed relates to recoverable activities and is supported by proper evidence. HMRC’s separate VAT126 guidance highlights documentation, invoice information, online claims and common causes of delay or rejection. Claimants should establish a clear audit trail from the VAT126 submission to the purchase ledger, invoice image, payment record and activity classification. Reviews 

should address duplicate invoices, credit notes, supplier corrections, private or business use, grant-funded activities and costs allocated between eligible and ineligible functions. Evidence retention should be aligned with the period during which HMRC could review or assess the claim. Governance should identify who prepares, reviews and authorises each claim, how errors are corrected and how disagreements are escalated. Organisations should also maintain a log of HMRC correspondence and decisions so that any future appeal deadline is visible. Until regulations are issued, claimants should not assume a new assessment or appeal process is already operational. Nevertheless, stronger reconciliations and evidence controls. 

Official sources: HMRC VAT126 powers and safeguards 

External articles: SLCC: HMRC guidance on VAT126 claims | ICAS: HMRC powers and safeguards

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