VAT overpayments figures released

Date: 21st July 2009

HM Revenue and Customs (HMRC) has earmarked some £4.8 billion for VAT repayments, a newly-published report has revealed.

With as many as 13,000 businesses of all sizes having submitted claims for backdated overpaid VAT prior to the government's deadline at the end of March, the report shows that around £1.4 billion has already been repaid.

Claims totalling £8.5 billion have been made, but around 60 per cent of the claims currently being processed by tax officials have been found to not qualify for the relevant refunds, meaning only another £4.8 billion has been set aside for the remaining cases.

Indeed, so far, only a small minority of claims have resulted in refunds, for example new businesses paying too much VAT when being set up.

The repayments push comes on the back of a January 2008 ruling by the law lords, who concluded that HMRC had acted illegally in 1997 when it set a three-year limit on claimants for believed tax overpayments dating back to 1973.