Unjust enrichment - arrangements for reimbursing consumers: The law
The statutory provisions
Schedule 5, paragraph 3(1) Finance Act 1997 gives us the powers to make regulations setting out how the reimbursements should be arranged. Paragraph 3(2) defines “reimbursement arrangements” as any arrangements for the purposes of a claim under section 137A of the Customs and Excise Management Act 1979 which:
1. are made by any person for the purpose of securing that he is not unjustly enriched by the repayment of any amount in pursuance of the claim; and 2. provide for the reimbursement of persons who have for practical purposes borne the whole or any part of the cost of the original payment of that amount to us.
Paragraphs 3(3) to 3(6) set out the scope of the regulations. These provisions allow us to place the following requirements on a business using the scheme to:
- make payment within a certain set period;
- repay to us any interest payable;
- require records showing how and in what form the repayment was made to customers; and
- repay any amounts not refunded to customers under the scheme to us.
Paragraph 3(7) specifically provides that the regulations have retrospective effect. This is important in two situations where:
- money was overpaid as tax before the regulations came into force and a business subsequently requests a refund of that money to pass onto customers after the regulations come into force; or
- we agreed, before the scheme was introduced, to refund money to a business on the basis that money would be passed onto its customers and the money has not yet been paid.
In both cases the scheme would apply. In the second example, where the claimants’ arrangements do not comply with the scheme, they will have to be revised and an undertaking signed before any money will be paid.
The regulations - definitions and general provisions
Regulation 9 defines certain words and phrases used in the Regulations:
|“Claims” which fall within the scope of the regulations||All claims where reimbursement arrangements have been made under section 137A of the Customs and Excise Management Act 1979. This includes claims made before the Regulations come into force but which had not been paid by then. So, if existing claimants’ arrangements for reimbursing consumers do not comply with the Regulations, the money will not be paid unless the proposed arrangements are modified to meet the new requirements.|
|‘’Reimbursement arrangements”||Any arrangements made by a claimant to make refunds to consumers who for practical purposes bore the cost, in whole or in part, of the original payment of that sum of money paid to us.|
|“The relevant amount”||That sum of money a claimant wishes to reimburse to consumers. This includes interest, as well as the capital sum (see Regulation 11) because it is the consumers who have not had use of the money, not the claimant.|