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If
you charge a customer VAT and subsequently discover that the supply
of goods or services was exempt, zero rated or outside the scope of
VAT you can make a claim to HMRC to refund the VAT overcharged.
The
phrase “unjust enrichment” means that you are required by HMRC to
refund any VAT repaid to you in this way to your customers, you
cannot keep the refund for yourself!
HMRC
have a special reimbursement scheme that deals with claims for
repayment. When making a claim you will have to agree to:
1. Sign a formal
undertaking that you will comply with the terms of the
reimbursement.
2. Make all
refunds to your customers within 90 days.
3. Repay any
residual amounts not returned to customers within 14 days of the 90
day time limit.
4. Pass on any
statutory interest paid with the refunds to your
customers.
Additionally
you will have to keep the following records:
- Names and
addresses of the customers you intend to
reimburse.
- Total
amount paid to each customer.
- Amount of
interest paid to each customer.
- Date you
refunded the money.
HMRC
will also seek to reduce refunds due if the supply resulted in a
claim for associated VAT input tax. For example if you supplied
services at standard rate and there were associated costs where you
recovered input tax, and then you discovered that the supply should
have been an exempt supply, then HMRC would reduce the refund of
over-declared output tax by the over-claimed, associated, input
tax.
If
you need to make a claim under the reimbursement scheme you will
need to submit a formal undertaking in writing. Please contact us
and we will organise this for you.
Click here for a call back from our office regarding
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