Date of issue: 22nd June 2009

CLAIM FOR FURTHER VAT REFUND URGES CLEMENT KEYS

Companies that have recently received refunds of VAT and simple interest due to earlier overpayments of VAT to HMRC should consider submitting claims for a further refund allowing for compound interest, according to chartered accountants Clement Keys.  

Director of VAT Services Steven Simmonds said that whilst HMRC will reject these claims- businesses should then lodge an appeal with the Tax Tribunal against that decision. Any appeal is likely to be delayed - pending a decision by the Court of Appeal on an appeal brought on behalf of a group of Motor Traders, against a High Court ruling.  

“The action was brought because HMRC would only pay simple interest on VAT incorrectly collected by them since 1973 and this was felt not to represent commercial restitution and that HMRC should have paid, based on European Legislation, compound interest. “The Motor Traders won a pyrrhic victory in that Mr Justice Henderson found that they should have been paid compound interest and not simple interest but he also ruled that the claims were time barred because the time limit for making such claims had already ended before the action had begun. “We understand that Mr Justice Henderson has already granted the Motor Traders leave to appeal to the Court of Appeal and so the dispute will continue with perhaps a reference to the European Court of Justice.”  

In a secondary joint action, an appeal is due to be heard in June 2009 by the Tax Tribunal but in view of the High Court decision and the possible appeal to the Court of Appeal it could be that this action is put back to a later date.  

Businesses that think that they may be entitled to compound interest should contact their advisor to discuss the position.