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HMRC internal manual

VAT Refunds

Unjust enrichment: How Section 80 and the unjust enrichment defence works in practice: Example 1

Subject to time limits, a business will receive credit for the overdeclared output tax. However, if there are other errors, including tax wrongly deducted as input tax, these will be netted off to arrive at the amount of tax adjustment to be made. For example:

   
Output tax overdeclared -£10,000
Associated wrongly deducted input tax +£2,000
Net overdeclaration -£8,000
Total Credit (£10,000)

 

 

 

In the above example, where unjust enrichment does not apply, the business will be credited with £10,000 which will result in a net amount of £8,000 being repaid if there are no other debts.

 

If there are other outstanding debts then the £8,000 will be offset against these and the net amount remaining if any will be repaid.