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HMRC internal manual

VAT Refunds

From
HM Revenue & Customs
Updated
, see all updates

Introduction to VAT refunds: Claims where no error as such has been made

Claims for a VAT refund may also arise where no error as such has been made, for example, where VAT is accounted for when a trader receives an advance payment for a supply that, in the event, never takes place.

This is because the trader will have had to account for output tax when he received the advance payment but, when the customer cancels his order, for example, that output tax will turn from having been properly due to being an amount declared as output tax that wasn’t due as such.