Time running out for three year cap claims

In 1996 and 1997 the UK government introduced legislation which capped claims for, respectively, unclaimed input tax and overpaid output tax. Recently, however, the House of Lords decided that the UK’s implementation of three year capping (as it is known) time limits were in breach of EC law as no allowance had been made for a transitional period in the UK legislation. Furthermore, the House of Lords said that HMRC had failed to respect the ‘legitimate expectations’ of taxpayers who had could have made a  claim before the time limits were introduced.

As a consequence of the House of Lords decision, taxpayers now have a window of opportunity (until 31 March 2009) to submit claims, which could conceivably extend as far back as the introduction of VAT in the UK in 1973, and which may include an additional claim for compound interest.

Why is this an issue?

Since the introduction of the three year cap, any claims for overpaid or under-recovered VAT will have been subject to the three year cap.  This decision provides   an opportunity to extend those claims backwards, to either 1 May 1997 for input VAT claims or 4 December 1996 for output VAT claims, or even, in some cases, to 1973.

Why should I act now? 

The deadline for submitting these late claims is 31 March 2009, but in many cases the records to support these claims are not readily available and quantifying  claims may take some time. PwC has considerable experience identifying, calculating and submitting claims on behalf of clients and in securing refunds from HMRC.

Contact details
Email: Paul Jackson
Tel: +44 (0)1509 604221