VAT repayments ― overstated or overpaid output tax

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note provides an overview of when a business may expect a refund or credit from HMRC in respect of overpaid or overstated output tax.

What is overstated or overpaid VAT?

HMRC is obliged to credit a business for an amount of overstated VAT in the following circumstances:

1)
a business has accounted for VAT to HMRC in a prescribed accounting period and has incorrectly accounted for an amount of output tax which was not actually due to HMRC
2)
HMRC has assessed the business for a prescribed accounting period and has accounted for an amount of output tax which was not actually due to HMRC

VATA 1994, s 80(1), (1A)

If the business has overpaid VAT to HMRC (ie because the tax liability has been accounted for twice or allowable input tax was not claimed), HMRC is liable to repay the amount of VAT that has been overpaid.

If a successful claim is made under (1) or (2) above, HMRC is only liable to

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