The possibility of recouping money owed stems from the recent Fleming case, which allowed VAT reclaims going back as far as 1973.

Following a decision by the House of Lords earlier this year that businesses can resubmit previously rejected claims, the 31 March 2009 deadline is fuelling a boom in recouped claims.

Given many claims are expected to run into the millions of pounds, the administration process is believed to be lengthy, with businesses delaying resubmissions at risk of missing out on money owed.

HM Revenue and Customs (HMRC) has itself estimated the claims to total as much as £1bn.
Paddy Behan, head of indirect tax services at Mercury Tax Group, said the ruling covers claims from the introduction of VAT in 1973 up to 1997.

Behan believes claims should be revisited and businesses that have repayment claims should re-check documentation.

However, limits will apply as many figures are based on estimates. But, because taxpayers are only required to retain documentation for a period of six years, some estimates may be forgotten, or an agreement could have been complied with under pressure.

‘Every taxpayer should look at their claims, and we can expect [HMRC] to begin to use arguments to defeat increases in claims. It’s a big issue ­ we’re talking hundreds of millions of pounds,’ he said.

Stuart Hindle, indirect tax partner at KPMG in the UK, said many companies have been caught off-guard about their eligibility to submit claims largely because the relevant dates extend back more than a decade.

‘If businesses don’t act quickly they run a risk of losing out, as all claims must be submitted by the end of March next year. This is much sooner than it may appear as the process for putting a claim together will involve extrapolating back, as records from the early Seventies will not be available,’ he said.

The motor vehicle industry in particular is expected to submit a large number of claims, as the tax is relevant to the industry irrespective of whether dealership principals are still in business.

Mike Sheppard, VAT partner at Grant Thornton, says tax rules have since changed for motor dealers and this is their final opportunity to recoup overpaid amounts.

Sheppard says Grant Thornton has already submitted a large number of claims in the lead up to the March deadline and expects a spike over the coming months. ‘It’s drawing a lot of interest and rightly so. The challenge is that the periods in question are so long ago that reliable business records are hard to come by,’ he says.