RÖDL UK Drives Change to HMRC VAT Refund Guidance

HMRC has updated its guidance on UK VAT refund claims made by non-UK businesses that are members of overseas VAT groups. The change provides greater clarity for affected businesses and may enable previously rejected claims to be revisited.

The development follows a successful challenge by RÖDL UK on behalf of an overseas client whose claims had been refused despite the business incurring UK VAT and seeking recovery through the Overseas VAT Refund Scheme.

Challenging an unfair outcome

Our client, a German business operating within a German VAT group, had submitted claims to recover UK VAT incurred in the course of its business activities.

HMRC rejected the claims on the basis that they had not been submitted by the VAT group’s representative member.

This interpretation created significant difficulties for certain overseas businesses. Whilst HMRC considered the VAT group’s representative member to be the appropriate claimant, that entity was already registered for UK VAT. Businesses that are UK VAT registered cannot generally make claims under the Overseas VAT Refund Scheme, which is intended for businesses that are not UK VAT registered.

As a result, the company that incurred the VAT was unable to recover it, whilst the entity that HMRC considered responsible for making the claim could not access the refund procedure.

RÖDL UK challenged HMRC’s position on behalf of the client and maintained that the approach created unintended barriers to recovery for overseas VAT group members.

Successful result for our client

Following our challenge, HMRC accepted three VAT refund claims submitted by the client. The outcome delivered:

• Approximately £90,000 of VAT repayments.
• Recognition of the client’s entitlement to recover the VAT incurred.
• Greater certainty regarding the treatment of overseas VAT group members.

The result demonstrates the importance of specialist VAT expertise when navigating complex cross-border VAT issues and challenging established interpretations where appropriate.

HMRC updates its guidance

HMRC has now published revised guidance confirming a new approach to VAT refund claims submitted by non-UK businesses that are members of overseas VAT groups. The revised guidance acknowledges that the previous position created unintended consequences and confirms that eligible businesses should be able to submit claims in their own right where they have incurred the VAT.

Importantly, HMRC has also introduced a process allowing certain historic claims rejected since 2021 to be reviewed.

What does this mean for businesses?

The revised guidance may create opportunities for businesses that:

• Are members of overseas VAT groups.
• Have previously had VAT refund claims rejected.
• Decided not to submit claims because of uncertainty around HMRC’s position.
• Have historic UK VAT that may now be recoverable.

Businesses affected by these issues should review their historic position and consider whether opportunities for VAT recovery now exist under HMRC’s updated approach.

RÖDL UK’s view

This development represents a significant and welcome change for international businesses seeking recovery of UK VAT.

The successful outcome achieved for our client, together with HMRC’s subsequent revision of its published guidance, demonstrates the importance of challenging positions that restrict legitimate VAT recovery and highlights RÖDL UK’s expertise in resolving complex cross-border VAT matters. Revenue & Customs Brief 8 (2026): UK VAT refunds for non-UK businesses in a VAT group confirms HMRC’s revised approach to overseas VAT group members.

For businesses affected by overseas VAT group structures, the updated guidance may present valuable recovery opportunities that warrant further review.

How can RÖDL UK help?

Businesses that are members of overseas VAT groups should carefully review their position in light of HMRC’s revised guidance. RÖDL UK has extensive experience advising international businesses on:

• Overseas VAT refund claims.
• Cross-border VAT group structures.
• Historic VAT recovery opportunities.
• HMRC disputes and technical VAT challenges.
• Complex UK and international VAT issues.

We can help businesses assess whether HMRC’s revised guidance creates opportunities to recover VAT, revisit historic claim periods or challenge previous decisions.

Given HMRC’s confirmation that certain claims rejected since 2021 may now be reviewed, businesses should consider whether they could benefit from a reassessment of their position.