BB/22/02 Three year cap—Marks & Spencer— ECJ judgment, Case C-62/00  STC 1036
Business Brief, Issue 22. 5 August 2002
Prior to 18 July 1996 if a trader discovered that he had paid more VAT to Customs & Excise than he ought to have, he had six years from the date on which the overpayment was made, or six years from the date on which he discovered his error, in which to make a claim to recover it from Customs. Where claims were made within six years of the date of discovery of an overpayment, they could go back to the inception of the tax in 1973.
On 18 July 1996, in the face of rising claims, the then Paymaster General announced that the time limit for claiming overpayments of VAT was to be reduced to three years. This meant that amounts overpaid more than three years before the date on which a claim was made could not be recovered. This change was applied to all claims made on or after 18 July 1996 and to all claims which had been made before that date but which had not yet been processed and paid. The capping legislation is contained in VATA 1994 s 80.
This change was enacted on 4 December 1996 by a resolution passed by Parliament under the Provisional Collection of Taxes Act 1968, which deemed the change to have had effect from 18 July 1996.
The manner in which this three-year time limit was introduced, by FA 1997 s 47(2), was