Requirements of a claim: overview
A claim must meet specific criteria and must be made within time limits.
Criteria an output tax claim must meet
A claim made under section 80 VATA 1994 must meet the criteria set out in regulation 37 of the VAT Regulations 1995. The claimant must
- set out the basis of, and the reason for, the claim
- show the amount being claimed
- show how that amount has been calculated
- break the amount down by reference to prescribed accounting periods, and
- be able to provide copies of documentation used in the calculation of the claim on request.
The terms of regulation 37 are mandatory and HMRC has no discretion to allow anything that does not meet the bullets above.
Criteria a late input tax claim must meet
Regulation 29 of the VAT Regulations 1995 provides that late claims to input tax must be made ‘… as the Commissioners may otherwise allow or direct either specially or generally …’.
Generally speaking, we ‘allow or direct’ that they be made in the same manner as is required by regulation 37 for claims under Section 80 (see above).
A late claim to input tax is one that is made in any accounting period after that in which the entitlement to deduct it first arose.
The entitlement to deduct input tax first arises when the taxable person has both incurred the input tax and received the VAT invoice or other documentation required by regulation 29(2) of the VAT Regulations to support its deduction – see the VAT Input Tax manual, VIT10000 for more detail.
Claims should not generally be estimated
You should not allow estimation (or extrapolation, sampling or approximation) of a claim.
As claims can only to go back four years and traders are required to keep their records for six, claimants should be able to make an accurate calculation.
There are two exceptions:
- Regulation 29(3) of the VAT Regulations 1995 makes specific provision for the estimation of input tax. However, its scope is very restricted and it does not apply to late claims for input tax. See the VAT Input Tax manual for guidance on entitlement to input tax.
- HMRC accepted estimated Fleming claims so that it was not excessively difficult or impossible in practice for potential claimants to make out their claims. This observes the EU law principle of effectiveness. However, requiring claimants to produce properly calculated claims going back only four years, when they are required to keep records for six, does not breach that principle.
Claimant must make a complete claim to stop the time limits clock
Whether for output tax or input tax, the claim must be complete in meeting all the criteria above in order to stop the time limits clock.
A person who
- makes a claim for some accounting periods or for some overpayments ‘without prejudice’ to other overpayments or accounting periods, or
- reserves his right to make further claims in relation to other overpayments or accounting periods
does not stop the clock in relation to the accounting periods for which no proper claim is made.
A letter, statement or notice of intention to claim at some time in the future does not stop the clock for the purposes of the time limit – see paragraph 45 of Grand Entertainments Company –v- CRC  UKUT 209 (TCC).
For more detailed guidance on new claims and amendments, see VRM5200.
For case law support for HMRC views, see VRM5300.