TaxAdministrationCustoms VAT defences starts to crumble

Customs VAT defences starts to crumble

Pressure is being placed on Customs and Excise to make a policy statement on the treatment of VAT repayments following its defeat by Marks & Spencer over biscuits and other foodstuffs.

On Thursday last week, the European Court of Justice ruled in favour of the high-street favourite in its long running dispute over the repayment of VAT on biscuits, tea cakes, bottled water and gift vouchers.

John Kennedy, a VAT partner at Deloitte & Touche estimated Marks & Spencer could hope to claim back VAT totalling between £8m and £9m, including interest.

But he said the M&S victory had opened the way for multi-million pound claims by a wide range of businesses, both retail and non-retail, to claim back VAT dating back to its inception in 1973.

‘These claims could be in excess of £100m,’ Kennedy said.

As yet, Customs has declined to make any definitive statement, since the ruling was handed down, only to say that it was disappointed by the decision and would be seeking legal advice.

Kennedy said what was now required was an ‘announcement by Customs to take away the uncertainty’.

He said it would be reasonable for the government department to give businesses until the next financial year to lodge VAT claims as well as give guidance on submission of documents as some businesses would have trouble finding documents dating back almost thirty years.

‘But,’ Kennedy added, ‘it is yet to be seen if Customs will adopt a hard-line approach. Everyone hopes Customs acts in the right spirit and takes a sympathetic approach.’

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