Government could face huge VAT repayment bill

by Calum Fuller

More from this author

29 Aug 2012

  • Comments
hmrc-2

A BILL running into billions of pounds could be on its way to the chancellor after an upper-tier tribunal ruled that VAT rebates can be claimed on bad debts for the period between 1973 and 1997.

The case was brought by BT and GMAC, which is the finance arm of General Motors, and HM Revenue & Customs is likely to appeal the decision, reports the Daily Mail.

BT stands to claim £92m as well as interest, while the total the exchequer could end up paying out could run into billions.

Reclaiming VAT on bad debts has seldom been done in the past due to the complexity of the process, but should the tribunal's decision stand, it will open the door to claims stretching back beyond the current four-year cap.

Should the taxman decide to appeal, there is a strong chance the European Court of Justice could become involved.

The ECJ has already ruled VAT should not be charged on food sold for immediate consumption, regardless of whether it is eaten inside or outside the retail premises, with sandwich chain Subway preparing a test case that could lead to other similar retailers putting together their own claims depending on the result.

Karen Robb, partner at Grant Thornton, told the Mail that the extent of the damage to HMRC is still uncertain.

Visitor comments

blog comments powered by Disqus
display:none

Add your comment

We won't publish your address


By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

Submit
  • Send
HM Revenue & Customs

Head Of Financial Control

HM Revenue & Customs, Telford, Full Time, Permanent/p>

 

Newsletters

Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials

Careers

Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you

Briefings

budget-management

Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.

cchcover

iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.