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What is unjust enrichment?

Unjust enrichment is the term used to describe a situation where the business would be placed in a better economic position as a result of obtaining the VAT refund than it would be if it had not incorrectly charged VAT on the original transaction (ie the business would get a windfall profit).

HMRC can refuse to repay claims for overpaid output tax made by business if the following applies:

1. •

   the business has incorrectly charged VAT to its customers

2. •

   the customer has borne the cost of the incorrectly charged VAT

3. •

   no loss or damage has been suffered by the business as a result of the error

4. •

   the business is unable or unwilling to reimburse the customers for the overpaid VAT should a refund by made by HMRC

The unjust enrichment provisions do not apply to claims for input tax.

The unjust enrichment provisions can be applied to all or part of a claim for overpaid output tax.