Director of Tax
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New guidance on historic VAT claims

17th Aug 2009
Director of Tax
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HMRC has issued new guidance on how to deal with VAT repayment claims following the introduction of new time limits over a decade ago.

The government introduced a three year limitation period for repayment claims for overpaid VAT in 1996/97. However, following an appeal by Marks & Spencer PLC in 2002, the European Court of Justice (ECJ) held that the UK had breached principals of community law because it had failed to provide an adequate transitional period to allow claims to be submitted before the time limit took effect.

In 2008, HMRC published the Revenue and Customs Brief (RCB), which states that the three year cap will not apply to claims made before 31 March 2009. In so doing, HMRC also discovered that its administrative regime for output tax claims had been inadequate, and as a result businesses were given a statutory transitional period running until 31 March 2009 during which they could make claims for:

  • Output tax over declared in accounting periods ending before 4 December 1996 – detailed in section 121(1) of the Finance Act 2008.
  • Unclaimed input tax in which the entitlement to claim deduction arose in accounting periods ending before 1 May 1997 – as set out in section 121(2).

All claims made on or after 1 April 2009 are capped at four years, or back to 1 April 2006 (whichever is shorter).
Of course, the enduring problem for potential claimants is proving a claim is legitimate. The updated guidance discusses evidence and the burden of proof, along with issues such as assignment of claims in more detail.
For more information, visit



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