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HMRC internal manual

VAT Assessments and Error Correction

VAT refund claims: Under Section 80 VATA 94 for recovery of over-declared VAT

The guidance for these claims can now be found in the VAT Refunds Manual under VR2000.

A claim made under Section 80 of the VAT Act 1994 must meet the criteria set out in Regulation 37 of the VAT Regulations 1995. It must

  • set out the basis of the error and the amount being claimed
  • show how that amount has been calculated and
  • the claimant must be able to provide copies of the documentation used in the calculation of the claim on request.

A letter simply stating that Alpha Ltd has over-declared its output tax liability by such-and-such an amount and demanding payment of the amount does not constitute a claim for the purposes of Section 80 and Regulation 37. Similarly, a letter expressing an intention to claim does not protect the potential claimant’s position in relation to the previous four years, see VR2800.

However, a letter that, by reference to evidence in the possession of the claimant, clearly sets out the basis of the claim, the amount and the method by which that amount has been calculated would probably constitute a claim within the terms of Regulation 37.

Whilst what may be being claimed, for example, under subsection (1) of Section 80 is an amount of over-declared output tax, we would expect that claimant, when making his claim, should disclose any unassessed liabilities that we are required to set off against the claim under Section 81(3A) of the VAT Act 1994.

The payment or credit that is made against any claim will always be net.

You should not refuse a claim as being invalid, where a trader submits a properly calculated claim for a ‘gross’ amount of output tax but does not provide any information on what outstanding liabilities there are to be set off under Section 81(3A). However, you should ask the claimant to provide details of all outstanding liabilities whether associated to the claim or not.

You might also mention that failure to disclose other errors in the accounting periods claimed for could lead to a penalty for the commission of a careless or deliberate error under the terms of Schedule 24 to the Finance Act 2007.