Lords ruling on VAT claims favours businesses

HM Revenue & Customs has opened the
floodgates to a possible £1bn in VAT refund claims, after the landmark House of
Lords ruling last month that the taxman had acted unlawfully in imposing a
three-year limit for reclaiming VAT on business costs in 1997.

Vogue and Tatler publisher Condé Nast, which brought the case to the courts
in 2002, will be among the first businesses to be paid.

It claimed £100,000 of staff travel and subsistence expenses going back to
1973.

In a briefing note released by HMRC yesterday the taxman said the judgement
in the Condé Nast case also applied to claims to recover VAT overpaid or
overdeclared in accounting periods ending before 4 December 1996.

‘Claims will now be paid, following verification, without the need to provide
an undertaking to repay HMRC,’ the taxman said.

Claimants who have been paid on condition that they would repay HMRC if the
House of Lords found in favour of HMRC have also been released from those
undertakings.

Deloitte,
the accountancy firm which acted for Condé Nast, said the government had given
evidence to the Lords that it could face claims totalling £1bn, but HMRC has not
confirmed this figure.

Further reading:
Advisers to
get Condé Nast windfall
Read the HMRC briefing note here