In the recent case of Express Brands, the appellant (EB) paid UK VAT incorrectly to HMRC. It missed the deadline to claim such VAT back from HMRC. HMRC rejected EB’s claims and the First Tier Tribunal (FTT) upheld HMRC’s decision.
In the words of the appellant, the decision “flies in the face of natural justice”. Unfortunately, neither HMRC nor the FTT had any other choice – the law is what it is.
The case concerned EB, an Amazon seller who sourced goods in the UK and sold them to consumers in Germany. EB incorrectly paid UK VAT in respect of its supplies. By the time EB received the correct advice, received German VAT assessments, registered for German VAT, paid that German VAT over to the German tax authorities and submitted claims to HMRC under S.80(2) VATA for UK VAT incorrectly paid, it had already barrelled past the 4-year time limit for submitting (the majority of) its claims.
80(4) provides: “The Commissioners shall not be liable on a claim… if the claim is made more than 4 years after the relevant date.” The relevant date is further defined there as the “end of the prescribed accounting period.”
Given that the provision is a “shall” provision, HMRC have no discretion to extend the deadline.
From the perspective of EB, this is a rather unfair case. Believing (incorrectly) that it owed VAT to HMRC, it dutifully paid this over. On learning that it owed German VAT on those supplies, EB paid this over, too. EB then tried to claim the overpaid VAT back from HMRC.
EB quite understandably argued that it had been subject to “double-taxation” on its supplies. A double-taxation argument cannot, however, save a taxpayer from missing claim deadlines.
EB had acted morally in this case and failed on a technicality. But this technicality has a moral merit of its own: namely, that a tax system requires certainty. HMRC has significant fiscal responsibilities. This burden would be even more challenging if HMRC could still be on the hook for VAT incorrectly paid at any time after 1973.
The moral of this particular story is to seek timely VAT advice as this would likely have saved EB an expensive lesson.
Would you like to know more?
For specialist guidance on VAT compliance for your organisation, get in touch with Luigi Lungarella or send us an enquiry.
