Unjust enrichment: Reimbursement: Pre-undertaking procedures
Before any refunds or credits are made to businesses that decide to use the scheme, regulations 43B to 43G of the VAT Regulations 1995 require them to sign an undertaking.
So that the claimant can decide whether it wants to operate the scheme you should send him a copy of the explanatory notes, and draft undertaking.
In order to operate the scheme the business must agree
to identify the name and addresses of those customers or consumers whom it intends to reimburse and keep records which show
- the name and address of customers or consumers whom they have or who they intend to reimburse
- the total amount of money paid to each customer or consumer
- the amount of interest included in the total sum refunded to each customer or consumer
- the date the money was refunded.
- to repay those customers all the credit received from HMRC, including interest, within 90 days of receiving the credit
- to notify and repay to HMRC any amount (including interest) credited and not repaid to customers within 90 days and
- to do this within 14 days of the expiry of 90 days - any amounts not refunded within this time period can be assessed under section 80B of the VAT Act 1994
- to keep the necessary records as set out in the regulations
- to comply with any notice about producing the records.
All of these requirements are necessary to ensure that any business will not be unjustly enriched when receiving a refund under the scheme. Without being able to identify the consumers who will qualify for a refund, undertakings do not achieve their purpose.
What’s more, it is reasonable for claimants to have to give an assurance that the amount credited to them can and will be refunded. If, for some reason, we refuse to accept an undertaking the claimant has a right of appeal to the Tax Tribunal under section 83(t) VAT Act 1994.