Customs defends VAT repayment time limits

Customs defends VAT repayment time limits

The head of VAT policy at Customs & Excise has launched an unprecedented defence of the Government’s decision to limit VAT repayments to three years. Martin Brown, a Customs commissioner and director of VAT policy, said the real reasons for the time limit were now getting lost in the argument.

In an interview with Accountancy Age, Brown accepted companies who wrongly paid VAT will only be able to claim part of the overpaid sums.

Brown said: ‘Until the limit was imposed, companies could go right back to 1973 (when VAT was introduced). The further back we go, the more ridiculous it seems. We are dealing with ancient history. There’s no way any of their customers back then are going to see any of this repayment. We felt we had to consider the interests of the public at large rather than honour any claims so far back.’

Brown said only ‘exceptional cases’ would be considered. He added: ‘We intend to introduce more sophisticated anti-avoidance provisions. People seem to have cottoned on to VAT as a variable overhead that can be managed down with sharp financial advice.’

Price Waterhouse VAT partner Christine Sanderson, a member of a Big Six delegation to Brown’s door two weeks ago, criticised this position.

She added: ‘The three-year limit will be challenged in the European Court.

It is denying taxpayers’ fundamental rights. The Government has spent money it was not entitled to and is now scratching around for any argument.

What we have here is tax not based on law, but Government judgment. It’s taxation by concession, and cuts right across the sixth European Directive.’

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