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HMRC internal manual

Air Passenger Duty

HM Revenue & Customs
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Unjust enrichment - arrangements for reimbursing consumers: Application and administration of the scheme

Where the scheme does not apply

The scheme, is not compulsory and does not affect a business’s right to claim that it would not be unjustly enriched if it received a refund. Where this happens, and we decide to invoke the defence of unjust enrichment, the claimant has the right of appeal to the VAT and Duties Tribunal. Should the Tribunal find in our favour, the option will still be available for the business to use the scheme should it so choose.

Does the scheme apply to part reimbursements?

The scheme does apply to partial reimbursements. Such cases occur when it is agreed that the business paid some of the tax being refunded rather than receive it from the consumers. For example, a business may submit a refund claim for £50,000, and agree that £30,000 was passed on to consumers, but ask to be allowed to keep £20,000 because it paid that amount from what would otherwise have been part of its profits. In such circumstances only £30,000 would be subject to the scheme. We would consider the £20,000 claim separately on its merits.

The CAT will need to agree with the trader what percentage of the refund will be passed back to the consumers before the undertaking is signed.

Administering the scheme, including costs

Once a business joins the scheme, it is the business’ responsibility to make the refund. Our only responsibility is to ensure that the business has met the terms of the undertaking. Under no circumstances should we make repayments to the business’s consumers.

The scheme does not allow the business to retain some of the refund to cover its costs, as this would defeat the scheme’s purpose. If an administration fee has been charged this can be recovered by assessment action, see APD10700.

Can refunds be set-off against debts on file?

A refund paid into a business’s tax account for the purposes of the scheme cannot be used to offset any debt on file. This is because the money refunded is for the consumers “and not the business”.

What about claimants who are no longer registered?

In some circumstances businesses which are no longer registered may ask to operate the scheme. This is acceptable where:

  • the business was registered for the whole period covered by the claim; and
  • it has the names and addresses of the consumers to be refunded.

They should be dealt with in exactly the same way as registered businesses which use the scheme.

If there is any doubt about whether a business can abide by the terms of the scheme the refund should not be made.