There is a special VAT refund scheme called the VAT Retail Export Scheme or Tax-Free Shopping that allows individuals not resident in the EU to obtain a VAT refund on goods bought in the UK and taken out of the EU. The scheme does not apply to services, for example hotel bills.
The scheme can be used to reclaim VAT on purchases from participating shops. It is important to note that not all retailers offer tax-free shopping and there is usually a fee (from the retailer) for making a claim. The retailer will usually request proof that the claimant is eligible to use the scheme, by presenting a passport or national identity card.
Claimants cannot get a VAT refund for items including:
- Mail order goods including internet sales, delivered outside of the UK.
- Goods which have been used, or partly used, in the EU.
- Motor vehicles and boats.
- Goods over £600 in value that will be exported for business purposes.
- Goods to be exported as freight and goods that need an export licence.
- Unmounted gemstones.
- A boat that is sailed to a destination outside the UK or EU.
There are a number of conditions that must be met in order to claim the VAT back including the requirement to leave the EU within three months of making the purchase. There is no minimum sales value specified in the legislation. However, most participating retailers have minimum purchase conditions. A special form (VAT 407) must be completed and qualifying conditions met.