“I recall arguing with Mark that there wouldn’t be an amount to get” back said HayNeil Consulting tax matters partner Barry Bloch. Global VaTax co-founder and CFO Mark Berger had approached HayNeil in June 2017 about helping the U.S.-based corporate finance and private equity firm recover value-added tax, and Bloch was sure there was nothing worthwhile to recover.
But by December 2017, Global VaTax had submitted documentation to all the countries where HayNeil’s people had stayed in hotels, attended conferences and paid for meals and entertainment. By May 2018, HayNeil had an extra $35,000 in its account, representing the VAT the company had paid out between July 2016 and December 2017 minus the cut Global VaTax took for its work.
HayNeil has offices in South Africa, Europe and the U.S. and fewer than 200 employees, 20 of them roaming consultants in Australia, Spain, Italy, Germany and the U.K. More than 160 countries charge VAT, a consumption tax. But internally, “we don’t look at the VAT situation,” Bloch said. “We are just interested in getting our guys to the other side.”
In June 2017, the VAT company reformatted the spreadsheet of expenses that HayNeil had provided, and then Global VaTax ran the spreadsheet through its proprietary VaTax Cloud system to calculate HeyNeil’s VAT Potential Report of possible savings. Bloch liked what he saw and signed on with the company in July. The next step was to move from potential savings to real VAT reclaim.
HayNeil provided images of its invoices, and Global VaTax used optical character recognition to search them for expenses related to VAT. Global VaTax then manually checked the invoices flagged by OCR to see whether they complied with VAT refund requirements. A tax invoice, called a receipt in the U.S., is required for VAT reclaim, but sometimes hotels give guests statements of their expenses instead of actual invoices.
The tax invoice “is the tender document that you need to submit your VAT refund,” Berger said. “Travelers … are not always fluent of what documentation they need to be getting. … They get a document from the hotel just to show their accounting department.” For eligible transactions for which the traveler turned in paperwork that isn’t compliant with VAT reclaim requirements, Global VaTax does the labor-intensive work of chasing down the right transaction records. “We actually contact the hotel and we get a fully VAT-refundable, compliant invoice reissued to the client,” Berger said.
Global VaTax employees then manually checked all invoices again and then submitted them with all the required reclamation forms and documents to the given countries’ VAT authorities. The company takes a cut of the funds it recovers as payment. “If we don’t recover, we don’t charge them anything,” he said.
Though Bloch originally assumed there was no money to be recovered for HayNeil, he has sent a companywide memo, urging travelers to upload their documents to HayNeil’s expense management system, in order to milk more from the Global VaTax relationship.