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HMRC internal manual

VAT Refunds Manual

Time limits: overview

It is important that you check that the claimant has made a claim within the statutory time limits. The period that applies depends on the law but is set out simply below with links to more detailed guidance on each time limit (including examples) at the end of this page.

VAT Act 1994

  • Section 80(1) – A claim to recover an amount over-declared as output tax must be made within four years of the end of the accounting period in which the over-declaration was made.
  • Section 80(1) – A claim to recover an amount wrongly disclosed as being an under-declaration of output tax, must be made within four years of the end of the accounting period in which the disclosure was made.
  • Section 80(1A) – A claim to recover an amount that was paid pursuant to an assessment that ought not to have been made, must be made within four years of the end of the accounting period in which the assessment was made.
  • Section 80(1B) – A claim under this subsection must be made within four years of the date on which the overpayment was made.

VAT Regulations 1995

  • Regulation 29 – A late claim for input tax must be made within four years of the due date of the return for the accounting period in which the entitlement to make the claim to deduct arose.
  • Regulation 34 – A person can correct an error on the VAT return for the accounting period in which the error is discovered without having to make a claim provided that the net error (taking into account both over-declarations and under-declarations) is £10,000 or less or £50,000 or less and less than 1% of the amount shown in box 6 of the VAT return for the period in question.  Such corrections must be made within four years of the end of the prescribed accounting period in which the error arose.
  • Regulation 38 – There is no time limit in Regulation 38 itself because there can be no limit imposed on the time that passes between the date on which a supply is made and the date on which the consideration for it can be changed. However, there is what might be called a secondary time limit imposed on the time within which the failure to reflect a change in consideration can be corrected.

However, given that the failure to reflect a retrospective discount in the next return after it is given effect in the business accounts gives rise to an error and given that the only way to correct that is by regulation 34 or section 80, it is the time limits in those provisions that place a restriction here.

  • Regulation 111 (Pre-registration) – This gives the Commissioners discretion to allow businesses to deduct as input tax VAT incurred before registration. Two time limits apply:

Tax on goods on hand at registration cannot be deducted if it was incurred more than four years before the effective date of registration. This includes VAT incurred on services performed on these goods.

The deduction of input tax on services bought in prior to registration for VAT is limited to those services bought in less than six months before the trader’s effective date of registration.

  • Regulation 111 (Post-deregistration) - This gives the Commissioners discretion to allow businesses to claim input tax incurred on services after deregistration, provided the services relate to the taxable business which was carried on prior to deregistration. However, that tax cannot be reclaimed more than three years after it was incurred.
  • Regulation 115 - (Capital Goods Scheme adjustments) – This regulation lays down time limits for making CGS adjustments in prescribed accounting periods other than the period in which the adjustment is required to be made.
  • Regulation 165A – A claim for bad debt relief can be made once six months have passed since the later of the date on which the consideration for the supply was due and payable or the time of supply. However, a claim must be made within four years and six months after the later of the two dates mentioned above.

Capping of late returns

Returns submitted late are not generally capped but the action you will need to take in relation to late returns which are received more than four years after the end of the relevant accounting period will depend on the circumstances.

Further detailed guidance

For more detailed guidance on: