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HMRC internal manual

VAT Refunds

HM Revenue & Customs
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Unjust enrichment: Some items to consider: Are customers VAT registered

If the majority of the claimant’s customers are registered for VAT it is far more likely that VAT has been passed on. Fully taxable VAT registered traders are not “VAT sensitive” and, as a result, it is likely that the claimant will have taken this into account when setting his prices. 

In Baines & Ernst Limited -v- Commissioners For HMRC, [2006] EWCA Civ 1040; [2006] STC 1632; [2006] BVC 719 Lloyd LJ said:

“VAT is a tax whose burden is designed to be passed on, so as to be borne by the end user of the goods or services. It can readily be regarded as passed on to users who are registered for VAT and entitled to recover input tax on purchases, usually by way of set off against output tax for which they are accountable on their sales.”