 Claims for old VAT and compound interest
Now is the time for businesses to consider whether they have historically overpaid VAT to HMRC. The deadline of 31 March 2009, imposed by HMRC in the 2008 Budget, is fast approaching: claims for VAT overpaid (or unrecovered) between 1973-1997 must be submitted by this date else the right to make the claim will disappear forever. Subject to on-going litigation, claims for VAT overpaid (or unrecovered) from 1997 up to three years ago have already expired. As always, claims for VAT overpaid in the last three years can always be made (the time limit is shortly to increase to four years but with transitional provisions to prevent claims which fell out of account falling back into account).
There is also the possibility that claims, if paid, should carry compound interest. Where the claim dates back to pre-1997 the right to compound interest would more than double the value of the claim. In February 2009, the High court is due to hear the first case on whether compound interest applies to VAT claims but so much money is at stake the issue is likely to be taken to the ECJ before there is a final answer.
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