Overpaid tax—the statutory regimes
Produced in partnership with Etienne Wong of Old Square Tax Chambers

The following Tax practice note produced in partnership with Etienne Wong of Old Square Tax Chambers provides comprehensive and up to date legal information covering:

  • Overpaid tax—the statutory regimes
  • Income tax, capital gains tax and corporation tax—overpayment relief
  • VAT—overpayments
  • VAT—the four-year cap
  • VAT—late claims to recover input tax
  • VAT—set-off
  • VAT—making a claim
  • VAT—unjust enrichment

Overpaid tax—the statutory regimes

This Practice Note outlines the statutory provisions regulating the recovery of:

  1. overpaid direct tax, for instance if a person has paid an amount by way of income tax where income tax was not due, and

  2. VAT paid by a taxable person to HMRC in excess of the amount they were liable to pay, either as a result of paying too much output tax or recovering too little input tax

Where these statutory regimes do not apply, it is possible that there may be a claim under the law of restitution. For information on how the law of restitution applies in the context of overpaid tax, see Practice Note: Overpaid tax—restitution.

For the additional issues to consider where tax has been overpaid under provisions that are, or were, in breach of EU law (for overpayments before the end of the Brexit implementation period on 31 December 2020) or retained EU law (for overpayments after that date), see Practice Notes:

  1. Interaction of EU law and direct tax

  2. VAT—European legal principles, and

  3. Brexit and tax—the continued application of EU law

Income tax, capital gains tax and corporation tax—overpayment relief

Claims by taxpayers to recover overpaid income tax or capital gains tax are governed by rules in Schedule 1AB to the Taxes Management Act 1970.

Claims to recover overpaid corporation tax are governed by Schedule 18 Part VI to the

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