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HMRC internal manual

VAT Refunds

Unjust enrichment: Reimbursement: When the scheme does not apply

The existence of the scheme does not affect the claimant’s right to claim that he would not be unjustly enriched by the refund. 

If we reject a claim on the grounds of unjust enrichment, the claimant still has the right of appeal to the Tax Tribunal, see VR9000. If the Tribunal finds in our favour the option will still be available for the claimant to use the scheme, should he choose to.

The scheme can also apply to part of a claim. In certain cases a claimant may not have passed all the VAT charged in error on to his customers, because, for commercial reasons, he chose to absorb some of it.

For example, a person could submit a refund claim for £50,000, and agree that £30,000 was passed on to his customers, but ask to be allowed to keep £20,000 because he absorbed that amount from his profits. In such circumstances only £30,000 would be subject to the scheme. The £20,000 claim would be considered separately by us on its merits.