The First-tier Tribunal has considered that the submission of a late VAT Return applicable to a period more than 4 years old (depicting the correct tax) cannot substitute a previously assessed amount (detailing the incorrect tax).
In the case of Beds Beds Beds London Ltd (TC02039), published on 19 June, HMRC refused to repay to the Appellant £4,722.05 on the grounds that the Appellant's VAT Return was a 'claim' for repayment and was out of time, having been made more than four years after the relevant VAT period. The tribunal agreed that the submission of an outstanding VAT Return in these circumstances was a ‘claim’ under section 80(1A) and (4) VAT Act 1994.
By way of background, the Appellant failed to submit a VAT Return for its VAT accounting quarter 06/06. The due date for that Return was 31 July 2006. In consequence, on 11 August 2006 an automated assessment was issued by HMRC for £21,129.00 in respect of the Appellant's VAT liability.
The business submitted the VAT Return for 06/06 on 12 April 2011. This showed that the amount of VAT due for that period was £16,406.95. HMRC treated the submission of the Return as a claim for repayment of £4,722.05 of VAT overpaid – that being the difference between the amount assessed automatically and paid (£21,129.00) and the amount payable according to the actual VAT return (£16,406.95).
HMRC refused to make the repayment, even though they accepted that there had been an overpayment.
In making a claim for overpaid VAT, section 80(6) VATA 1994, specifies that a claim is to be made in writing to the Commissioners, and must state the amount of the claim and the method by which it was calculated. In this case the Commissioners agreed that the VAT return for 06/06 made by the Appellant as such a claim. But is that correct?
This case suggests that a VAT Return is a claim as envisaged under section 80 to the VAT Act. The point wasn’t argued, but is a VAT Return which shows the correct amount of tax payable really a claim as envisaged under the Act?
Where the Return is not requesting a repayment i.e. input tax is greater than output tax, it does not disclose the calculation of the figures or give any detail, but discloses the true amount of VAT payable is it really a claim to which section 80 prescribes? A claim would suggest the business would be asking for a refund, not lodging the actual amount payable for the period. In the author’s view, the fact that lodging the actual amount payable resulted in a repayment is not the same as making a claim for a repayment… it is just a consequence of making the correct declaration.
Perhaps this issue will be contended in a further tribunal.