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HMRC internal manual

VAT Refunds

Unjust enrichment: Reimbursement: Arrangements for reimbursing customers

The reimbursement scheme was incorporated in the VAT Regulations 1995 as regulations 43A to 43G by the VAT (Amendment) Regulations 1998.

The scheme is not compulsory but it provides businesses who accept that they would be unjustly enriched if their claim were met with the option of reimbursing their customers. They can either

  • do nothing, or
  • claim the refund/credit and pay it on to their customers. However, if they choose to do so, they must abide by the terms of the scheme and reimburse their customers in accordance with the regulations.

Refunds to customers (consumers) must be made either in cash or by cheque (regulation 43C(c)). Vouchers and credit notes are specifically excluded because customers may choose not to purchase goods or services from the refunding business again.