BB/13A/06 VAT—three-year cap on making claims—Court of Appeal judgment in Michael Fleming t/a Bodycraft
Business Brief, Issue 13. 24 August 2006
This Business Brief article explains HM Revenue & Customs' (HMRC) position following the judgment of the Court of Appeal in Michael Fleming (t/a Bodycraft) v CRC (Conde Nast Publications Ltd intervening)  EWCA Civ 70;  STC 864;  All ER (D) 199 (Feb) (Fleming). The court decided the case against HMRC but has granted permission to appeal to the House of Lords and HMRC are doing so.
Pending the outcome of the appeal to the House of Lords, HMRC will give effect to the Court of Appeal's judgment for those who wish to make a claim, under the terms of this Business Brief, which includes a requirement to repay, with interest, in the event that this judgment is overturned. Many taxpayers may choose to await the final outcome of the litigation. In either event, claims arising out of this litigation will carry an entitlement to make a claim for statutory, simple interest (under VATA 1994 s 78).
In 1996 and 1997, the Government introduced a 3-year limitation period on claims for repayment of overpaid VAT, the correction of errors and late claims to input tax. It is now accepted, following the ECJ's judgment in Marks & Spencer Plc v CCE  STC 1036 (M&S), that the statutory three-year limitation periods (introduced with no express transitional periods during which taxpayers were able to make claims under the pre-existing rules) were, in certain