Readers’ forum: Reclaiming VAT on expenses without UK bank account

Catch-22 problem

A UK subsidiary of a German company has one UK-based employee who visits customers for the holding company’s products.

The company’s income is commission paid by the holding company; the goods are shipped direct from Germany and the UK company is not involved in the supply of goods.

It is registered for VAT in the UK and submits repayment returns because it has only ‘outside the scope’ income and some expenses related to the employee’s travel etc.

The problem is that although it has a UK address it does not have a UK bank account – and HMRC won’t pay a VAT repayment to a foreign account (except on a foreign refund claim through the 65A system).

UK banks insist on UK resident directors but this company’s directors are all in Germany.

In my view the employee constitutes a ‘fixed...