If you would like to discuss any of the items featured in this months VAT News please contact Scott Craig, VAT Partner. Click on the links below for more:

VAT News - February 2009: Last chance to stake a VAT claim

An opportunity exists to recover overpaid or underclaimed VAT before 1 May 1997. In the current climate, it may be worth making a protective claim.

Although this opportunity has been highlighted in the past, many businesses and organisations have not thought about potential opportunities or have put off reviewing their records or taking action.

The deadline of 31 March 2009 for businesses and organisations to obtain refunds (and interest) of VAT from HMRC is fast approaching. This is your last chance to stake a VAT claim.

Background: The Conde Nast & Fleming VAT cases

These cases challenged the way that the UK's three year capping legislation was introduced on 1st May 1997. This capping was introduced without a reasonable time for taxpayers to correct any retrospective errors and overpayments of VAT. The Courts found that this action was against EU law and as such has allowed eligible taxpayers to make retrospective claims.

As a result, claims can be made for:

• Underclaimed input tax before 1 May 1997; and
• Overpaid output tax before 6th December 1996.

As already stated, these claims must be submitted to HMRC by 31 March 2009.

claims must be submitted to HMRC by 31 March 2009

Typical claim areas

• VAT on expenses attributable to share or bond issues
• VAT on employee mileage claims
• VAT on staff expenses and entertaining
• VAT on entertaining overseas customers & clients
• VAT on car fleet bonus payments
• Import VAT
• VAT on investment management services
• VAT on membership subscriptions
• Partial exemption calculations
• Non Business calculations
• Charity fundraising expenses
• Admission fees to cultural attractions such as museums, zoos and theatres
• Subscriptions to sports clubs
• Golf club visitors fees
• Previously "capped" voluntary disclosures or VAT assessments
• VAT on goods and services that have faced a change in VAT treatment (ie tea cakes)
• VAT wrongly charged on the supply of agency staff
• Potential claims on capital works
• Any claim that was submitted which was previously refused on the grounds of unjust enrichment.

Who can make a claim?
Any VAT registered person or body can make a claim.
To date, we have considered claims with the following types of clients:

• Golf clubs
• Arts bodies
• Listed companies
• Businesses with international trade
• Retailers
• Charities
• Educational Bodies
• Pension Funds

So far the following questions/issues have arisen:

It was so long ago, I don't have the records?

Not having evidence or supporting documents such as invoices doesn't mean a claim cannot be made. HMRC allow estimations for the VAT that was either underclaimed or overpaid. We have experience of collating and submitting claims and the form that HMRC are willing to accept.

I don't have to time or resources to look for the information to make a claim!

We have experience of making these claims and collating them as quickly and accurately as possible. Other than an initial discussion and regular updates, our service is designed to take the work away from you.

My claim will only be worth a few thousand pounds, it hardly seems worth it?

We have found that the most significant element of any repayment claim is the 10 years (plus) of interest that is also available. In addition, a separate claim can be submitted for the interest element (based on compound interest rather than the current simple interest). This particular issue is currently being considered by the Courts and, if successful, could lead to increased payouts.

How much will it cost?

Although the VAT claims could result in a refund of thousands for some taxpayers, we believe in providing a value for money service that reflects the time we spend compiling and submitting a claim.

Won't HMRC argue that I should pass the savings on to customers and argue unjust
enrichment?

Not always. A recent ruling in the House of Lords (Marks & Spencer's plc) confirms that the unjust enrichment defence cannot be used against any claim made for periods before 26th May 2005. Therefore any claims for output tax that were previously denied by HMRC can be revisited and any claims that were not pursued previously for this reason can now be submitted.

What you should do now?

If you believe that your business or organisation is eligible for a claim in one of the above areas (or any other area for that matter) we would be more than happy to assist with any claim process.

We have a proven track record in making these claims for a range of businesses and organisations and have experience in dealing with the HMRC team that process the claims.

The deadline for claims is approaching and after 31 March 2009. Please ensure you do not miss out.

Contact  Scott Craig  if you would like to discuss this or any other VAT issue.