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HMRC internal manual

VAT Refunds

Claims for overdeclared output tax: The law: Community law

There is no provision in either the Sixth VAT Directive (77/388/EEC) or in the Principal VAT Directive (2006/112/EC) setting out the rules according to which claims for overdeclared output tax must be dealt with under domestic law.

However, consistent case law of the Court of Justice of the European Communities (ECJ) states that:

“According to well-established case law, the right to a refund of charges levied in a member state in breach of rules of Community law is the consequence and complement of the rights conferred on individuals by Community provisions as interpreted by the court - see Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case 199/82) [1983] ECR 3595 at 3612, para 12.”

In other words, businesses have a Community law right to recover from the tax authorities any amounts paid or declared as tax in contravention of Community law.