VATGPB4850 - Section 33 bodies: refund claims: verification of VAT 126 claims

Introduction

From time to time claims are selected for verification. Those chosen for verification, or which fail checking (see VATGPB4830), are passed to the Public Authorities compliance staff. In many cases the compliance team will be able to deal with any issues by corresponding directly with the body. Occasionally, though they may require local colleagues to visit the body.

Handling of referrals

It is important to be aware that the claims have not been repaid and so should be treated in the same way as pre-repayment credibility queries for VAT registered businesses. This should include, for example, giving each claim a unique local number.

The compliance team will have explained why the claim has been referred and what issues need to be addressed. It will therefore be preferable if somebody familiar with VAT and section 33 bodies be allocated. Referring claims by un-registered bodies to the specialist team has the benefit of keeping it up to date with developments in the sector generally and helps to ensure consistent treatment locally.

By their very nature un-registered bodies are generally unfamiliar with VAT. Volunteer officials, who may change from year to year, will prepare most claims. Errors will arise through ignorance or misunderstanding. However, in dealing with errors this does not mean that you should treat them any more favourably than a registered person.

There is no entitlement to repayment supplements in the event of delays in repaying claims. Although statutory interest may be appropriate in certain cases, where there has been departmental delay. When verifying claims, it is important to make sure that the tax has not already been recovered in an earlier claim.

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Dealing with errors

Errors are to be notified to the claimant in writing with details of the revised repayment due. A copy of this letter must be sent to the UBODS Team who are responsible for making the actual repayment (see VATGPB4830). The copy for the UBODS Team is to be countersigned at the locally agreed level and a copy retained in local records.

There is no statutory right of appeal to a VAT tribunal for section 33 claims. However, any request for reconsideration involving a reduced claim should be treated in accordance with normal local procedures.

Penalties may be applied in respect of claims that are found to contain inaccuracies (see CH81010). There is a right of appeal against any penalty applied, as well as protection under the Human Rights Act.

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Previous errors

If verification suggests errors in previous claims the UBODS Team are able to provide listings and copies of earlier claims. However, this will only be appropriate if the amount of tax at risk is significant. It may be more cost effective to make certain that the un-registered body understands the correct VAT treatment for future claims. This is a matter for local discretion.

VAT law does not require an unregistered person to maintain or retain any records other than those needed to support the claim. However, other bodies such as the Audit Commission or the District Auditor’s office may require records to be retained for a longer period.

There is no legal basis for un-registered bodies to be assessed for previous errors, but anything significant from earlier periods can be adjusted on a current claim. If this results in a net payment due from the claimant, they are to be notified in writing with a request that payment be made to UBODS Team, who should be provided with a copy of the letter.