<b>Tax News:</b> BT to take VAT appeal to Europe. By Louise Birkett

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BT's claim for a refund of 24 million in overpaid VAT has been referred to the European Court of Justice by the Court of Appeal.

The overpayment, originally of 40 million, was down to a glitch in a computer system that ran the monthly payment plans in 1991.

When someone whose account was in credit left the monthly scheme, a refund was given. As this reduced the amount of consideration, the VAT bill should also have been reduced. Instead, it was increased and the error wasn't discovered until 2003.

Unfortunately, the law is less than clear on what happens about HMRC's repayments of overpaid VAT. On the one hand the VAT Act 1994 says the taxpayer is entitled to a refund providing the claim is made within three years.

But a concession published by HMRC says there is no time limit when the error i...

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