Brendon Silver, MD of European and North American operations at the VATit Group talks to AccountingWEB about the technology changing international VAT recovery.
The reasons for this vary almost as widely as the estimates, and include linguistic complications, bureaucratic smokescreens from reluctant tax offices, lost invoices and a lack of resources – particularly among small businesses. For other firms the amounts they are likely to recover simply aren’t worth the administrative effort.
However, the development of application programming interfaces (APIs) and their introduction to international VAT recovery has the potential to open up the market, potentially recovering millions for companies engaging in cross-border VAT transactions.
To find out more about the impact of APIs on the international VAT market AccountingWEB spoke to Brendon Silver, MD of European and North American operations at the VATit Group.
The group started life as foreign VAT reclaim specialists 15 years ago, and according to Silver always focussed on cross-border VAT recovery. Over the last few years as technology has moved VATit has moved with it.
In 2014 it launched its VAT Cloud product to cater for where they felt the market was going. Using APIs to connect with expense management programmes and ERP software, the VAT Cloud pulls out relevant data and images, then uses the information extracted to automatically create claims that link into the various tax offices around the world.
Expense management tool integration
“Let’s assume you’ve got a UK company with around 3,000 employees travelling both in the UK and cross-border (to Germany, France, Switzerland etc.)”, explained Silver, “and they use a travel expense management tool like Concur – one of our integration partners.
“Every penny that is spent on business travel will be recorded in their travel expense management tool, so the data (the invoice, the amount they spent, where they spent it, and what they spent it on), will be stored and ready to access. In addition, they will be able to scan copies of their expense invoices into the system via their expense management tool.
“The VAT Cloud then links directly to the system via an authorised API, so this example UK company will say ‘we want to recover all the VAT that we’ve incurred across Europe and locally in our VAT return through the refund mechanisms abroad’; we then effectively press a button and all of the information would come into our VAT Cloud.
“That comprises of the data and the invoices, then our system calculates: ‘You’ve spent €200,000 in Germany, these are the individual transaction lines, these are the hotel invoices that back up those claims’. The system then checks the invoices are compliant for local laws, takes the information from the data, matches it against the invoices, and creates claims that get automatically sent to tax offices around Europe (and anywhere else with a reclaim mechanism).
“The power of the tool is that before clients even go ahead with us, because can have the data we can actually quantify what their potential saving is by using our product.
“Travel management expense companies like our solution because they can go to big firms and say: ‘We want you to use our software’, and can actually say to them ‘our software will cost you £40,000 a year to implement, but by implementing it you can recover £200,000 worth of VAT'. We can quantify what the savings are.”
Technology just one part of the pipeline
However, in spite of the potentially vast sums of money available via API VAT recovery, Silver offers a word of warning to those looking to enter the market and take advantage of these technological developments.
“The technology is just one part of this pipeline that connects the clients to the tax office.
“APIs are a relatively new piece of technology in the VAT recovery market, but what you have to understand is that when you’re getting VAT back from the EU, there’s not a willingness to pay that money back, and you need the expertise on the compliance side, the legal side, to actually know how to unlock these claims from the tax offices.
“We’ve spent 15 years interacting with tax offices around the world: each one has their own rules and languages, and each one doesn’t want to pay us money. The key to our success is our expertise, and technology is just one part of the front-end process to get the invoices out of our clients’ systems.”