VAT diktat poised for High Court challenge
A High Court writ due to be lodged next week will provide the first legal test to Customs & Excise’s three-year limit on VAT claims.
Leading tax lawyer Clare Mainprice is finalising the writ’s details, which will claim up to z450,000 in overpaid VAT. Mainprice, who is confident of victory, told Accountancy Age she has five other writs in the pipeline.
She said: ‘If the writs are heard within the next few weeks, Customs would not have a legal basis to fight on. The limit is just a ministerial statement while the law remains. It is a crown prerogative to tax and is contrary to the 1689 Bill of Rights.’
The three-year limit introduced on 18 July is due to be enshrined in law in November’s Budget. Under the new diktat, businesses can only claw back wrongly-paid VAT for three years, while Customs can claim underpayments stretching back six years. Mainprice said if the limit was made law before the writs were heard, it would be challenged by a judicial review.