V5.159C Capping provisions in relation to VAT repayments

Part V5 Compliance, enforcement and appeals

V5.159C Capping provisions in relation to VAT repayments

V5.159C Capping provisions in relation to VAT repayments

On 18 July 19961, a three-year time limit was announced in relation to the refunding of tax claims made under VATA 1994, s 80 (see V5.159–V5.159B). The main legislation was introduced on 19 March 1997, the date of Royal Assent to FA 19972, and was intended to have retrospective effect. The scope of the restriction has since been extended further. The time limit was extended to four years with effect from 1 April 20093.

VAT capping provisions—18 July 1996, initial proposals

The changes which (then) Customs and Excise sought to introduce were:


    •     A three-year time limit for retrospective refund claims. For claims which had already been made but not paid (including those subject to ongoing litigation), the three-year limit was to apply from the date of the claim or the commencement of litigation, whichever was the earlier.


    •     A time limit on the payment of statutory interest to reflect the repayment period for the associated tax.

At the time that these measures were introduced, the corresponding legislative changes needed to give them effect had not been implemented.

Following this announcement, local VAT offices first refused and then deferred claims which were already submitted but not paid at 18 July 1996, or which were submitted subsequently, either in full or in part. On 19 November 1996, the High Court stated that the policy of refusing claims, at a time when the relevant legislation was not in place, was unlawful and ultra vires, as was the

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