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HMRC internal manual

Compliance Handbook

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HM Revenue & Customs
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Assessing Time Limits: VAT Limitations: Credit, refund or repayment of over-claimed input tax

A person may deduct too much input tax in a return or make a late claim to input tax to which they are not entitled. This may result in them receiving an excessive VAT credit or a payment they ought not to have received. In these circumstances we can make an assessment to recover the excessive credit, refund or repayment.

From 19 March 2008 you can make an assessment to recover the excess amount within the later of

  • two years after the end of the prescribed accounting period in which the claim was wrongly credited, refunded or paid, or
  • one year after the evidence of facts sufficient to justify the making of the assessment came to your knowledge.

This means that

  1. you can make a recovery assessment within two years after the end of the accounting period in which the money was wrongly credited, refunded or paid whether or not the facts have changed since the payment was made. The time limits set out in CH51300 do not apply to these assessments
  2. where an amount has been credited, refunded or paid and it later turns out that the facts on which the payment were based were wrong - and that on the new facts, it would not have been credited, refunded or paid - you must make the recovery assessment within one year after that new evidence came to your knowledge. From 1 April 2009 these assessments can only be made to recover amounts credited, refunded or paid in prescribed accounting periods that ended less than 4 years (20 years in certain cases) previously, see CH51300. The 4- and 20-year time limits are subject to the transitional provisions explained in CH51520 and CH51540. Before 1 April 2009 the 4-year time limit was 3 years.

You are only likely to use this time limit if you make the assessment more than two years after the end of the accounting period in which the credit, refund or repayment was wrongly made.

Guidance on the time limits applying before 19 March 2008 can be found in the VAT Assessment and Error Correction guidance (VAEC1180).

VATA94/S73(2)

VATA94/S73(6AA) as inserted by FA08/S120

VATA94/S77(1)