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HMRC internal manual

VAT Refunds

Four year cap - other provisions: Capping of late returns: Where the VAT return declared liability accepted by HMRC is a repayment return

Where no central assessment was issued, if a late return shows a net repayment due to the business, the return should, if agreed by HMRC, be accepted and the net amount claimed on the return should be repaid, subject to verification, adjustment or denial of a VAT credit as normal.

However, any assessed amount which was paid more than four years earlier should not be repaid because it is considered to be an overpayment by way of VAT which is capped under Section 80(4) of the VAT Act 1994, see VR2830 for guidance on time limits.

For example: Baker Ltd fails to render a return for accounting period 06/06 and receives and pays a centrally issued assessment for £20,000.

In 2011, the company submits its return for that accounting period and it turns out to be a repayment return for £30,000. That VAT credit should be paid subject to verification as normal. However, the £20,000 paid by Baker Ltd on the assessment should not be repaid.