Commentary

V5.159BA Claims for VAT repayment—unjust enrichment

Part V5 Compliance, enforcement and appeals

V5.159BA Claims for VAT repayment—unjust enrichment

V5.159BA Claims for VAT repayment—unjust enrichment

As a general rule, a taxpayer has the right to repayment of overpaid tax1. Consequently, an appeal lies to a VAT tribunal against a decision of HMRC with respect to a claim for repayment or credit under the foregoing provisions2. However, it is a defence, in relation to a claim, that repayment/credit would unjustly enrich the claimant3.

The purpose of unjust enrichment is considered by HMRC to 'prevent businesses from being enriched at the expense of their customers who, for all practical purposes, bore the burden of the wrongly charged VAT… It is not a question of whether the enrichment was unjust in subjective or moral terms but whether the VAT was added to the price charged by the claimant; whether the claimant would have charged less had he known that his supplies were not liable to VAT.'4.

The burden of proof as to whether unjust enrichment exists was described in the following terms by the Advocate-General in a case before the European Court of Justice5:

'… the burden of proof lies initially on the administration to show that the charges were passed on and that as a consequence there was unjust enrichment. It cannot, however, be right for the mere assertion by the administration to be sufficient to transfer the burden of proof to the claimant or to raise presumptions, rebuttable or irrebuttable, that there has been a passing on. If the administration produces evidence which shows that there has been a passing on then the

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