Unjust enrichment ― overview

‘Unjust enrichment’ is a phrase used in the VAT legislation to describe a situation whereby a supplier profits by charging an amount of VAT that is not due (strictly speaking it is not VAT) and obtains a refund from HMRC, by repayment of or credit for the amount charged which should not have been charged. In this situation, the supplier receives the amount twice ― once from the customer(s) and once from HMRC. To prevent such a situation arising, HMRC may invoke the defence of unjust enrichment. The defence of unjust enrichment is not limited to situations where a supplier has charged an amount of VAT that is not due in error, not realising that the supply qualified for a lower rate of VAT or was exempt from VAT. The defence of unjust enrichment can apply in other situations, for example if HMRC policy or the VAT legislation is found to be incorrect.

Reasons for charging VAT that is not due include HMRC or the VAT