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HMRC internal manual

VAT Refunds

Claims for overdeclared output tax: Quantification of a claim: What amendments can be introduced into an open claim

In quantifying a claim, you are only establishing the amount to which the claimant is entitled on the claim that he has made. Once the claim has been quantified, it will then be subject to set-off, see VR8000.

It is important to remember that a claim is limited to the issue upon which it is based so that, for example, a claim to recover output tax overdeclared on zero-rated supplies of X and a claim to recover output tax overdeclared on exempt supplies of Y are separate claims.

Subject to that restriction, while a claim remains uncompleted, it can be adjusted up or down, either by the claimant or by HMRC at any time.

If the amendment that the claimant is trying to introduce would normally constitute a late claim for input tax under Regulation 29 of the VAT Regulations 1995, that cannot be treated as an adjustment or an amendment to a claim under Section 80 of the VAT Act 1994.

For example:

Alpha Ltd makes a claim on 30 June 2012 for output tax overdeclared on the sale of X-Type Widgets in the accounting period ending on 30 September 2008. On 12 July, the company discovers that it has not deducted enough input tax in that accounting period.

They cannot treat that as an adjustment to their Section 80 claim but they are still in time to make a claim under Regulation 29 in any event. This is because they can make such a claim at any time within four years from the due date of the return for the accounting period in which the entitlement to deduct the input tax first arose - in this scenario, 31 October 2008.

If, on the other hand, they only discover the underdeduction on 5 November 2012, they are out-of-time to make the claim - see VR6000 about late input tax claims for more details.

If Alpha Ltd discovers other output tax errors unrelated to that claimed for in the earlier claim (made on 30 June 2012), they will be the subject of a new claim and cannot be treated as amendments to that earlier claim.