Businesses should revisit VAT returns between 1973 and 1997 and claim for any VAT they are owed by March 31 2009 before the window closes for good.
Issuing the alert, advisors said HMRC will place a three-year limit on VAT claims on April 1st, shutting off any chance for firms to claim VAT owed in the 24-year period.
One such firm, UHY Hacker Young, said businesses should bring claims for overpaid VAT as quickly as possible, as all such claims will be nullified in less than six weeks.
Part of the problem, however, is that firms often only realise until decades later that they overpaid or have failed to recover all of the VAT to which they are entitled.
Compounding the situation, the process to recoup VAT from Revenue & Customs can take time to prepare, yet already claims underway by UHY amounted to “significant sums.”
“Every business that paid VAT between 1973 and 1996 should look at old VAT returns and think about whether they might be owed money,” said the firm’s VAT partner Simon Newark.
He cited estimates that HMRC may have to repay £1bn of VAT in respect of these claims, suggesting hard-pressed firms may soon get a “welcome boost to cash flow.”
The three-year limit on VAT claims was introduced in 1996 and 1997, but the House of Lords ruled that it was unlawful as the state had not allowed for a transition period in which firms could make claims dating back to the introduction of VAT in 1973.
Feb 24, 2009
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