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HMRC internal manual

VAT Refunds

Claims for overdeclared output tax: What can be claimed: General

We would expect any claim submitted under Section 80 of the VAT Act 1994 to set out

  • the total amount of output tax overdeclared
  • the total amount of any output tax underdeclared in the accounting periods covered by the claim, and
  • all of the unassessed liabilities that will be required to be set off under Section 81(3A) of the VAT Act 1994.

The unassessed liabilities that must be disclosed include

We would expect any claim submitted under Section 80 of the VAT Act 1994 to set out

  • any overclaim of input tax in the accounting periods covered by the claim;
  • any amount (whether relating to input tax or output tax) that could have been assessed as VAT, interest, surcharge or penalty (even if it’s now out-of-time) for whatever accounting period provided that any assessment would have been founded on the same mistake that led to the claim.

Having said that, you should not refuse a properly calculated gross claim, if it meets the criteria in Regulation 37 of the VAT Regulations 1995, simply on the grounds that the claimant has not provided a schedule of all of the errors that must be taken into account before any payment is made.

Where the unassessed liabilities are not disclosed in the claim, you should ask that the claimant make the necessary disclosure as soon as possible.

At the end of the day, if these liabilities are not disclosed, the claim will not be paid. We will only pay the claim once we are satisfied that all of the necessary set-offs have been made or that there are none to be made.

Before the claim is paid, you should check that no further liabilities have arisen since the claim was made. You might mention to the claimant that failure to disclose other errors in the accounting periods claimed for could lead to a penalty for the commission of a careless or deliberate error under the terms of Schedule 24 to the Finance Act 2007.

You will find further details on the policy on set-off between taxes and the mechanics of accounting for it in the Debt Management & Banking Guidance, see DMBM700000.