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HMRC internal manual

VAT Refunds

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HM Revenue & Customs
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Four year cap - other provisions: Capping of late returns: Payment returns where the VAT return declared liability accepted by HMRC is less than the assessed amount

Where a business has paid a prime or additional assessment which is higher than the accepted VAT return declared liability for a given accounting period.

The recovery of the excess amount will be capped by Section 80(4)(a) of the VAT Act 1994 if more than four years have passed since the end of the accounting period in which the assessment was made, see VR2830 for further guidance on time limits.

For example: Able Ltd does not submit its VAT return for accounting period 03/07 and a centrally issued assessment is made on 20t h May 2007 for £20,000.

Able Ltd pays that assessment on 15 June 2007. On 12t h July 2011, Able Ltd submits the return for accounting period 03/07 which shows the true liability to be only £15,000.

Having paid the assessment, the only way that Able Ltd can recover that £5,000 is to make a claim under Section 80(1A) of the VAT Act 1994. Any such claim has to be made within four years of the end of the accounting period in which the assessment was made.

In this example, as the assessment was made during accounting period 06/07 a valid claim under Section 80(1A) must be made by 30 June 2011.

That applies equally where a centrally issued assessment is made and paid and it turns out that the return submitted late for the accounting period in question was a repayment return - see the decision of the VAT & Duties Tribunal decisions in Bissell Homecare (Overseas) Inc (VAT Tribunal Decision 18217) and Brian Elton Cox (VAT Tribunal Decisions 18709 & 18990).