Warning over interest on VAT rebates
Rebates will be taxed, warns experts
Tax advisers have warned that businesses should beware that VAT rebates made
in connection with the high profile Fleming and Conde Nast court rulings will
face tax on the interest that comes with the refund.
The deadlines for claims was 31 March with most firms experiencing a rush
from clients wanting to file claims.
Michael Ashdown, VAT director at BDO Stoy Hayward, said he expected
businesses to be caught offguard when the repayments are issued as many will
assume it
is a VAT refund.
‘It will catch people by surprise… people think these repayments aren’t
liable to tax,’ he said.
The refunds will be issued to businesses seeking to recover money for input
VAT not claimed in the period prior to 1 May 1997 and for output VAT
over-declared in the period before 4 December 1996.