VAEC8120 - VAT refund claims: Under Regulation 29 for late claims of input tax
HMRC would expect that the claimant would set out the basis of the error and the amount being claimed, show how that amount has been calculated and provide copies of the documentation, in particular the relevant VAT invoices, used in the calculation of the claim.
Regulation 29 of the VAT Regulations 1995 provides that late claims to input tax must be made “ … as the Commissioners may otherwise allow or direct …” and, generally speaking, they are allowed or directed to be made along the same lines as are required by Regulation 37 for claims under Section 80.
Consequently, a letter that simply states that the taxable person is entitled to make a late claim to input tax in such-and-such a sum will not be treated as a claim. Similarly, a letter stating an intention to make a claim will not be seen as a claim. On the other hand, a letter that clearly sets out the basis of the claim, the amount and the method by which that claim was calculated by reference to business records would probably constitute a claim.
A late claim to input tax is one that is made in any accounting period after that in which the entitlement to make a claim to deduct it first arose. The entitlement to make a claim to deduct input tax first arises when the taxable person has both incurred the input tax and received the VAT invoice (or other alternative evidence acceptable to HMRC) to support its deduction - see VAT Input Tax (VIT) for the guidance on deduction of input tax.
Whilst what may be being claimed, for example, under regulation 29 of the VAT Regulations 1995 is an amount of under-claimed input tax, we would expect that the claimant, when making his claim, should disclose any unassessed liabilities that we are required to set off against the claim under Section 81(3A) of the VAT Act 1994.
Whilst the claim may be for an amount of unclaimed input tax, the payment or credit that is made against that claim will always be net of associated errors and outstanding, established debts.
If, when a trader submits a claim, he does not provide any information on what outstanding liabilities there are, you should not refuse the claim as being an invalid one. However, you should ask the claimant to provide details of all outstanding liabilities whether associated to the claim or not.
You might also mention that failure to disclose other errors in the accounting periods claimed for could lead to a penalty for the commission of a careless or deliberate error under the terms of Schedule 24 to the Finance Act 2007.