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HMRC internal manual

Air Passenger Duty

HM Revenue & Customs
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Specimen letters: Undertaking in connection with the reimbursement scheme regulations made under Schedule 5, paragraph 3 of the Finance Act 1997

Covering letter

The attached undertaking must be signed and the form returned to this office before any money will be refunded under the reimbursement scheme.

It is only necessary to sign this undertaking where you accept that you would be unjustly enriched by receiving the refund [and associated statutory interest]* of the sums overpaid as tax to HM Revenue and Customs, but have agreed, for the purposes of the scheme, to reimbursing those consumers who for practical purposes bore the amount of money being refunded.

None of the refund can be kept to cover any administrative expenses you may incur in administering the scheme.

The undertaking

“I, the undersigned, can identify the names and addresses of consumers whom I intend to reimburse. I will repay to these persons, in cash or by cheque, all the money I receive from HMRC [including associated interest]* without any deduction, for whatever purpose, within 90 days of receiving the money and understand that I cannot use the money for any other purpose. Furthermore, any money I have not repaid to consumers will, without reminder, be repaid to HMRC within 14 days of the 90 days expiring. I will keep the necessary records as set out in the Regulations and I will comply with any notice given to me by HMRC about producing the records I am required to keep.”

SIGNATURE ……………………………………………………………

NAME ……………………………………………………………………..

ADDRESS ……………………………………………………………….

REGISTRATION NUMBER ………………………………………..

*If applicable


The reimbursement scheme

The reimbursement scheme (the “scheme”) only applies where you accept that by receiving a refund of sums overpaid as tax your business would be unjustly enriched at the consumers’ expense. This is because the consumers have for practical purposes paid the tax charged in error and by not passing the refund back to them your business would benefit as a result.

In such cases a refund of overpaid tax will only be made if you agree to reimburse those consumers in accordance with the terms of the “scheme”.

Who are the consumers?

The regulations refer to consumers, not to customers. Consumers are all those persons who have for practical purposes borne the whole or part of the original amount of tax overpaid by you. They will not necessarily be your direct customers.

Who can use the scheme?

The scheme can be used by any aircraft operator (that is any business which is currently registered for Air Passenger Duty) who wishes to refund to consumers any money they overpaid as tax. The scheme can also be used by those businesses which are no longer registered; they are subject to the same terms and conditions as businesses that are.

When the scheme does not apply

The existence of the scheme does not affect your right to claim that you would not be unjustly enriched by the refund. Should we reject your claim on the grounds of unjust enrichment, you still have the right of appeal to the VAT and Duties Tribunal. If the Tribunal finds in our favour the option will still be available for you to use the scheme, should you so choose.

The scheme can also apply to part of a claim. In certain cases you may not have passed all the tax charged in error on to the consumer, because for commercial reasons you chose to absorb some of it. For example, you could submit a refund claim for £50,000, and agree that £30,000 was passed on to the consumers, but ask to be allowed to keep £20,000 because you absorbed that amount from your profits. In such circumstances only £30,000 would be subject to the scheme. The £20,000 claim would be considered separately by us on its merits.

The scheme’s conditions

A refund under the scheme will only be made to you if you agree to:

(a) Sign an undertaking in the format attached. Once signed it cannot be amended.

(b) Make all refunds to consumers within 90 days.

(c) Repay to us within 14 days any residual amounts not returned to consumers after 90 days. No reminders will be sent. If you fail to do this we will assess for the residue.

(d) Pass to consumers any statutory interest paid with the refund. This is subject to the same terms and conditions as the refund.

(e) You must keep a record of the:

• name and addresses of those consumers you intend to reimburse;

• total amount of money paid to each consumer;

• amount of interest, paid to each consumer; and

• date the money was refunded.

How soon after the undertaking has been signed should repayments be made?

We would normally expect you to have the scheme ready to implement when we receive your signed undertaking and to have begun contacting customers straight away, rather than waiting until well into the 90 day period before doing this. A late start to refunding the money without good cause will not be seen as a valid reason for extending the 90 days refund limit.

Statutory interest

Where the sums being reimbursed were overpaid because of an error made by us statutory interest will be paid. Any statutory interest paid under this scheme is subject to the same terms and conditions as any other money returned under the scheme and must be refunded to consumers. This is because it is the consumer who did not have use of the money, not the claimant who collected it from them to pay to us. Attached to this note is a list of interest rates used by us to calculate statutory interest. Interest is calculated on a simple, rather than compound, basis.

Any statutory interest must be refunded in full, any residue must be returned to us within the specified time limit of 90 days.

If you have problems working out how much interest is due to your customers, please contact the CAT.


To ensure that you are refunding your customers in the agreed manner, we will ask to see your “scheme” records. We will give written notice of our intention to see these records.

The costs of administering the scheme

Any costs you incur in administering the scheme must not be taken out of the refunds. If you do we will assess for its return.