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HMRC internal manual

VAT Refunds

Unjust enrichment: How Section 80 and the unjust enrichment defence works in practice: Example 2

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 £10,000
Input tax credit wrongly claimed +£2,000
Net overdeclaration -£8,000
Total credit (£10,000)


A credit of £10,000 is denied on the grounds of unjust enrichment and an assessment for £2,000 may be made and notified to the business under the provisions of Section 73 of the VAT Act 1994 (subject, of course, to the time limits) for the wrongly deducted input tax.



If the input tax is attributable to the supplies on which the output tax overdeclared, we shall set it against the claim under the terms of section 81(3A) of the VAT Act 1994 and there will be no need to make any assessment.