VRM12600 - What to do with claims resulting in unjust enrichment: how much is to be reimbursed

Where a business accepts that they will be unjustly enriched and chooses to enter into the reimbursement arrangements, you must establish to what extent they will be unjustly enriched as this will be the amount that he will be required to reimburse.

The extent to which a claimant will be unjustly enriched may be any amount up to the gross amount of output tax that they have wrongly brought into account.

In some cases the amount that he must reimburse may be greater than the amount physically paid to him under Section 80. In others, the amount may be less than the net amount that he is paid.

Set-off

Amounts set against the claim under, for example, section 81(3) of the VAT Act or section 130 of the Finance Act 2008 will make a difference to the amount that will be paid to the claimant under section 80 but it will not make a difference to the amount that the claimant will be required to reimburse should he undertake to reimburse his customers.

In the £100 claim above, the claimant is required to reimburse the £75 to his customer.

Let us say that there is an outstanding VAT assessment of £25 and an outstanding corporation tax assessment of £25.

That now means that the claimant has claimed £100 and we credit him with that amount.

However, we set against that £100 the £25 wrongly deducted as input tax, the £25 VAT assessment and the £25 corporation tax assessment and we pay him £25.

Nevertheless, he will still be required to reimburse the £75 and that is because he would have had to pay us the two assessments in any event.