VAT repayments ― overstated or overpaid output tax

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • VAT repayments ― overstated or overpaid output tax
  • What is overstated or overpaid VAT?
  • What are the conditions and time limits?
  • Conditions
  • Time limits
  • VAT groups
  • Can HMRC set off to repayment against VAT and other taxes due?
  • Insolvent businesses
  • Set-off against other taxes
  • Can errors be corrected on the VAT return?
  • More...

VAT repayments ― overstated or overpaid output tax

This guidance note provides an overview of when a business may expect a refund or credit from HMRC in respect of overpaid or overstated output tax.

What is overstated or overpaid VAT?

HMRC is obliged to credit a business for an amount of overstated VAT in the following circumstances:

  1. 1)

    a business has accounted for VAT to HMRC in a prescribed accounting period and has incorrectly accounted for an amount of output tax which was not actually due to HMRC

  2. 2)

    HMRC has assessed the business for a prescribed accounting period and has accounted for an amount of output tax which was not actually due to HMRC

VATA 1994, s 80(1), (1A)

If the business has overpaid VAT to HMRC (ie because the tax liability has been accounted for twice or allowable input tax was not claimed), HMRC is liable to repay the amount of VAT that has been overpaid.

If a successful claim is made under (1) or (2) above, HMRC is only liable to pay / repay the amount due after deducting any amounts due to HMRC by the person concerned (see below).

The following, if done properly and at the right time, are not claims under VATA 1994, s 80:

  1. bad debt relief claims ― see the Bad debt relief ― repayment of VAT by the debtor guidance note

  2. capital goods scheme adjustments ― see the Introduction to the capital goods scheme guidance note

  3. credit and debit note adjustments ― see the Credits and debits guidance

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