Destination VAT Reclaim: The Road to Compliance

With business travel spend plummeting in recent times, you might be wondering if VAT reclaim and compliance is still a hot topic. The answer is yes! The complexities of domestic and global VAT reclaim have not gone away and your business can still fall foul of non-compliance or unclaimed money. The good news is that increased digitisation means no one has to brush VAT reclaims – and potential lost cash – under the carpet. Instead, solutions such as Concur® Tax Assurance by VATBox, will take out the guesswork, improve reclaim rates and ensure compliancy.

Heading in a Different Direction

People are still spending, they're just spending in different ways, shifting primarily from travel to domestic spend. We might not be flying or travelling as much but we’re buying office equipment for our home offices and doing lots of other things that still incur VAT. Plus, there’s still over 160 countries around the world where you can claim VAT and these VAT rates change constantly.

At a time when businesses are having to fiercely protect their revenue streams, money left unclaimed could be the difference between survival and closure. Add to that the potential of costly audits and fines if things go awry, you can see the problem with manual processing.

Potential Bumpy Ride? Overcoming the Potholes

On the one hand, VAT reclaim returns money to your business and on the other, you remain compliant and reduce your risk of heavy fines. Despite these benefits, lot of companies decide not to process everything to avoid being subject to any fines if they get it wrong. It’s easy to understand why.

It’s difficult to stay on top of local and global VAT reclaim guidance, with 160 or more countries all with their own nuances, rules and regulations. It’s a tall order and, even if you get on top of that challenge, the reality of human error could prove costly. By digitising the process you eradicate all of these headaches.

So, what are your choices when it comes to staying compliant?

  1. The first route is doing nothing. This is of course not really a way forward at all – the risk of non-compliance is high and money is being left on the table when it could be reinvested into the business.
  2. The second route is to have in-house teams looking at VAT. This is better than doing nothing but with constantly changing regulations (plus the complexities that Covid has created), the risk of non-compliance is still very real.
  3. The third route is to outsource the process, which usually involves only partially looking at the biggest spend examples. It’s a shortcut to compliance, but you could get lost and end up back where you started.

What’s really needed is a way for non-tax experts to be able to view expenses and see a breakdown for what is or isn’t eligible for VAT reclaim.

Help on the Horizon: SAP Concur and VATBox

Moving from arduous manual processes to a centralised and automated way to navigating complex tax regulations across all transactions IS possible - with an intelligent solution such as Concur Tax Assurance from VATBox, which uses AI and machine learning to automatically identify VAT eligible expenses.

Imagine being able to see, at a glance:

  • A breakdown of what's eligible and not eligible for VAT reclaim (according to changing rules and regulations)
  • The split between what is domestic and what is foreign VAT
  • What has been disqualified
  • What has been processed
  • What has been posted and submitted for tax reclaim

Power Up from Your Dashboard

That’s what Tax Assurance from VATBox does. Your dashboards will include details of the transactions plus the evidence backing them up. The benefit of seeing eligibility and non-eligibility is the ability to drill down into that data. With a higher level of visibility, you have a full breakdown of what claims have been rejected and the reasons why they’ve been disqualified, down to the individual receipt level and expense line entry.

There's even a dashboard that focusses on supplier analysis - showing all your suppliers and highlighting which ones were good at providing VAT receipts, as well as which were not so good! With this knowledge, you’re able to speak to suppliers and potentially negotiate better deals. If, for example, a supplier is failing to provide VAT or compliant receipts, then your busines might be better off choosing a more expensive supplier from which you can easily reclaim VAT.

An Optimised Ride for Employees

The obvious benefit of digitisation is the impact on employees. Streamlining an extremely complex process is valuable in itself, before you even look at any boost in revenue. In addition to compliance, optimisation is a huge benefit. One client used to take seven days to do an audit around VAT Reclaims but since implementing the system that dropped to two hours. That’s a massive time saving and comes about because of the transparency of the system and the efficiency of the dashboards.

Time to Move

If you’re not doing anything about compliance and VAT reclaim yet, now is the time to act. With more spend happening domestically there is a huge opportunity to analyse your data and reclaim back what is owed to you. It’s not too late to make up for lost time, either. In some countries it’s possible to go back up to five years to analyse and potentially recover money domestically as well.

Automation is crucial, so be sure you don’t underestimate the peace of mind that digitising this process brings. Rather than having to audit multiple people and processes within an organisation, you have just one solution to be audited!

Compliancy aside, Tax Assurance from VATBox, in conjunction with SAP® Concur travel and expense solutions, feeds information back into the T&E processes, giving a good insight into your business and what you can do to make it even better.

To find out more, listen to Rachel and Mark on the “Compliance: How to get it right” SAP Concur Conversations Podcast on Acast or search SAP Concur Conversation wherever you listen to your podcasts. 

Loading next article