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HMRC internal manual

VAT Refunds

HM Revenue & Customs
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Unjust enrichment: Reimbursement: Does the scheme apply to part reimbursements

The scheme does apply to partial reimbursements. 

For example, a taxpayer submits a claim for output tax overdeclared of £50,000, agrees that £30,000 was passed on to his customers but asks to be allowed to keep £20,000 because it absorbed that amount from its profits. In this situation, only £30,000 would be subject to the reimbursement scheme.

We would consider the remaining £20,000 separately on its merits.

After setting any liabilities against it the total claim (under section 81 of the VAT Act 1994 and section 130 of the Finance Act 2008), we would be liable to pay so much as remains.

However, officers will need to agree with the claimant the precise amount of the refund that will be passed back to the business’ customers before the undertaking is signed.