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HMRC internal manual

VAT Refunds

HM Revenue & Customs
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Unjust enrichment: How Section 80 and the unjust enrichment defence works in practice: Example 5

Output tax overdeclared £10,000
Associated input tax credit wrongly claimed £2,000
Debt-on-file £5,000
Net overdeclaration -£8,000
Total credit (£10,000)
Amount to be reimbursed to customer £10,000

In the above example, where unjust enrichment does apply and the business chooses to enter into the reimbursement arrangements then they will be credited with £10,000, but receive a physical payment of £3,000. The extent of their unjust enrichment is the gross amount of the overdeclared output tax (£10,000).

The claimant is required to reimburse the entire £10,000 notwithstanding the fact that he has only been paid £3,000.

If he fails to reimburse the money, either in whole or in part, we should make an assessment under section 80B to recover however much has not been reimbursed, up to the full £10,000.