Little time left to claim special VAT refunds

Businesses are being reminded that the date by which they can claim a special, one-off refund on past VAT payments is 31 March 2009.

VAT-registered firms have until then to submit a claim for input VAT not claimed before 1 May 1997 and for output VAT overpaid before 4 December 1996.

Claims can stretch back to 1973.

The chance to recover the VAT payments has come about because in 1996 and 1997 the UK government implemented rules that said that any claim for under-recovered or overpaid VAT must be governed by a time frame of three years.

But a House of Lords ruling in early 2008 judged that the imposition of the three-year limit contravened European law as it permitted no transitional period.

The ruling went on to add that HM Revenue and Customs had not met the legitimate expectations of VAT taxpayers who may have submitted a claim before the three-year cap was introduced.

As a result, businesses now have a one-off chance to recover any VAT that had previously been blocked by the three-year time limit rule.

Firms can submit for a VAT refund based either on overpayments or on input charges not claimed, and claims can go back as far as 1973 when the tax was first introduced.

Businesses that believe they have overpaid or underclaimed their VAT need to identify when they paid too much or did not recover enough in charges, and put together a claim.

Even if accounting records are not available from before 1997, claims can be lodged on an estimated basis.

HMRC will pay valid claims, even without records, and interest on top. But they must be filed before 31 March. 

Any business that would like advice on submitting a claim should contact us as soon as possible.