Commentary

BB/2/98 Three year time limit for refunds—revisiting of refund claims

Part V16 Forms and other HMRC material

BB/2/98 Three year time limit for refunds—revisiting of refund claims

BB/2/98 Three year time limit for refunds—revisiting of refund claims

Business Brief, Issue 2. 27 January 1998

This Business Brief explains Customs and Excise's revised position concerning the three year time limit for VAT refunds, and its effect on VAT refund claims submitted between 18 July 1996 and 1 May 1997. It also explains the solutions to some of the most commonly encountered problems. With effect from 18 July 1996 claims for refunds of money overpaid as VAT to Customs were limited to a period of three years (VATA 1994 s 80(4)). Customs have always taken the view that s 80 is the only section in VATA 1994 which gives businesses the right to submit a claim for a refund of money overpaid (as opposed to under-claimed) as VAT.

Customs' revised position on the three year cap

It has always been Customs' view that the three year cap applied initially only to payment traders. We originally decided that payment traders were those who, over a period of time, had paid more VAT to Customs than received by way of VAT credits. We have now reviewed the position and concluded that for capping purposes it is important to look at a business's individual accounting periods—as detailed in its VAT returns—rather than its trading pattern as a whole. This means that the three year time limit applying to s 80 claims and introduced with effect from 18 July 1996 applies only where money has been paid to Customs for an individual VAT accounting period, ie

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