Small businesses urged to claim back VAT

Accountants have urged small business owners to make sure they claim back any VAT due to them following a recent court ruling.

KPMG explained that a decision in the House of Lords in January meant that small businesses could potentially seek refunds related to VAT either mistakenly overpaid or rebates that were under-claimed between 1973 and 1997.

This is because the Lords decided that the introduction of a 'three year cap' on back-dated claims in 1996 was invalid in some respects.

As a result, businesses have until the end of March next year to submit VAT claims to HM Revenue & Customs.

"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," explained Stuart Hindle, indirect tax partner at KPMG in the UK.

"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."