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HMRC internal manual

VAT Refunds

Set-off and net-off: For other taxes:

Under Section 130 of the Finance Act 2008, we are entitled to set off against any amount due to a trader under a claim, any amount due to the department by way of any debt under any other of the tax regimes for which this department is responsible.

However, whilst the set-off provided for in Section 81 of the VAT Act 1994 is mandatory, it is a matter for the Commissioners’ discretion whether we apply the set-off under Section 130. Policy on this aspect of set-off is administered by Debt Management & Banking (DMB).

You should always check that no further liabilities (established debts in relation to any of HMRC’s taxes) have arisen since the claim was made. You will find further details on the policy on set-off between taxes and the mechanics of accounting for it in Business Guidance Note 050/08 at DMBM700000.