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HMRC internal manual

VAT Statutory Interest Manual

Official error case law: mistaken acceptance of tax which was not official error

Rogers Torbay LTD - and - C&E Commissioners, LON/93/835 (VTD 11389)

During a VAT visit the appellant informed the visiting officer that it had under-declared a sum of VAT and submitted a voluntary disclosure (now called error correction report) and paid the VAT sum. However, following a later audit it transpired that no error had been made and the VAT should not have been paid to HMRC. The company sought statutory interest on the refund.

The Tribunal dismissed the claim on the basis that where an error has been made, the circumstances should be looked at subjectively rather than objectively and it should be determined ‘from what action did the confusion directly flow’. In this case the Tribunal decided that the appellant’s incorrect error correction report caused the confusion.

The Tribunal added that in the circumstances it would be ‘repugnant to common sense and to the intention of legislation’ to conclude that the overpayment was due to an error on the part of HMRC.

VATA s78