Three weeks left for overpaid VAT claims

10 March 2009

Business

Printers, publishers and manufacturers have just three weeks remaining in which to claim overpaid VAT for the period prior to 1 May 1997, following January's landmark House of Lords ruling in favour of magazine publisher Cond Nast.

Condé Nast reclaimed around £100,000 in overpaid VAT from HM Revenue & Customs (HMRC) as a result of its successful legal battle, in which it argued that the state had unlawfully imposed a three-year limit on VAT claims because it had not allowed for a transition period for companies to file claims dating back more than three years.

As a result of the unanimous ruling, Condé Nast was able to claim for staff expenses dating back 24 years from the overnight creation of the three-year cap, in 1997, to the introduction of VAT, in 1973. It is estimated that the final cost to HMRC of the Lords’ decision could reach £1bn.

However, HMRC has imposed a 31 March 2009 deadline for the receipt of claims.

Deloitte, who advised Condé Nast on their appeal through the courts, said that claim areas worth investigating included revisiting voluntary disclosures, VAT on deal costs, staff expenses, mileage claims and VAT on manufacturer bonuses in relation to fleet cars.

Any submitted claims can also include a supplementary claim for the compound interest accrued, meaning that even relatively minor claims can lead to significant refunds.

Deloitte stressed that a lack of records was not necessarily an obstacle and that clients would not need to invest resources in order to prepare and progress a claim.

The firm highlighted a global healthcare client that had reclaimed £200,000 worth of overpaid VAT on employee mileage, staff lunches and staff entertaining.

Deloitte said: "The company initially felt that it lacked the internal records and data to quantify its claims – however, we committed to prepare the claim based on internal and external data that we collated. As a result, a repayment of nearly £200,000 was secured."