British Business Missing Out On Vital VAT Rebates

by Robert Lee, Tax-News.com, London

21 August 2008

Businesses across Britain are potentially missing out on the chance to claim VAT rebates ranging from tens of thousands to several million pounds, according to KPMG in the UK.

With the deadline for submission being the end of March next year and claims typically taking several months to compile and agree, companies risk running out of time to apply for refunds, KPMG warned on Wednesday.

The opportunity for refunds relates to VAT either mistakenly overpaid or rebates that were under-claimed between 1973 and 1997. However, many businesses are unaware of the opportunity to claim rebates over this 24 year period.

The door has opended for companies to claim these rebates as a result of a decision in the House of Lords in January this year which said that the introduction of a “three year cap” on back-dated claims in 1996 was invalid in so far as it failed to include transitional arrangements for taxpayers making any claims relating to periods prior to May 1997.

Stuart Hindle, indirect tax partner at KPMG in the UK, commented:

“The door is open for 24 years worth of VAT claims – from 1973 when the UK joined the EU to 1997 when the law was changed.

“Many companies whom we have spoken to about their eligibility to submit claims were previously completely unaware that the opportunity even existed – perhaps because 1997 is so far away.

“But if businesses don’t act quickly, they run a risk of losing out as all claims must be submitted by the end of March next year. And this is much sooner than it may appear as the process for putting a claim together, involving extrapolating back as obviously records dating back to the early seventies will not be available. This can be time consuming. Leaving it too late could prove very costly.”

According to KPMG, in some cases, these VAT rebates could make all the difference to a business’s survival as the credit crunch takes hold.

Stuart Hindle continued:

“The sums at stake are often substantial: we have seen claims ranging from GBP50,000 to several million pounds. And this could make a huge difference to whether a business makes it through these difficult times or not. Because the opportunity exists to go back so far, even small amounts that are under-claimed in any one year can be significant if it is extended back in time.”

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