With Travel Management Companies such as ITS increasingly providing multinational services, both in-country or via regional hubs in response to client demand, companies are looking to address how they manage their ability to track, and ultimately reclaim tax where possible (or economically viable!) – particularly given the various forms it can take in different countries.

And if you are a UK company, you don’t need us to tell you about what kind of impact on navigating the claims process that 2008/09/EC, the former 8th directive, or 86/560/EEC – also known as the 13th directive, has had on your finance teams.

(Don’t worry – this won’t be a long article! We’re staying “high level” and will refrain from technical terms).

VAT (as a revenue raising/consumption tax applied by governments) has been globally embraced, but how it’s applied varies from one country to another.  There are different rates for different products and services, exemptions, and thresholds.  Hence, of course, the existence of Tax Advisors and VAT specialists such as the www.thevatconsultancy.com (we could mention others, but they seem a good sort and clearly “know their stuff”. And, in true BBC fashion, we would add – “other providers are available etc.”)

Determining what VAT you could possibly reclaim is, superficially at least, a relatively straightforward process – at least when your employees, on their own or through a Business Travel Agent such as ITS, are purchasing a flight from an airline, a room from a hotel or a car from a hire company and have the VAT receipts and records, appropriately “tagged” within some form of centralised repository for easy access.

It may be worth adding that the situation is easier if your travel agent hasn’t packaged a trip so that its constituent costs are somewhat “opaque” – where they are operating as what’s known as a “Principal” (in other words selling their own fares/rates rather than as an “agent” that connects buyer and vendor through an online booking tool). But as I said, we weren’t going to get too technical here…

The key determinant as to whether you wish to reclaim VAT (where services are “consumed” in countries where you have no legal entity) seems to be whether “it’s worth the effort”. A straightforward cost v benefit assessment. Not all countries have reciprocal tax reclaim arrangements between each other and securing your hoped-for reclaim is not always easy – or fast.

So what’s our advice, limited as it may be? First of all, you don’t need a “Big4” Accountancy Firm to determine your exposure or the potential savings – and by the Big 4 we still mean the likes of PricewaterhouseCoopers (PwC), Ernst & Young (EY), Klynveld Peat Marwick Goerdeler (KPMG), and Deloitte.

As mentioned earlier, there are smaller, specialist advisors who can help. And don’t forget the role of your Travel Management Company itself (ITS, for example, has its own Expense Management & Card Payment solution, integrates with key players across the sector and consolidates travel spend data on a global basis – something that’s foundational to the exercise at least if you want to streamline the process).

So to make life easier, if you can (and this is where we come in) book your travel in one place (one supplier even if based across multiple countries), apply a consistent policy for expense capture and data management – and ensure that you are in a position to crunch the numbers to determine the likely return on investment (the effort involved).

And talk to a specialist who won’t break the bank merely to establish the potential or help you review your current approach. 

Remember, not everything can be reclaimed. And not everything you spend incurs VAT.

Which, occasionally, will be a relief. If not, of course, a tax relief.