HM Revenue and Customs Brief 07/08
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Issued 20 February 2008
Three year time limit for VAT claims
The recent House of Lords decisions in the cases of Michael Fleming (t/a
Bodycraft) -v- HMRC (Fleming) and Condé Nast Publications Ltd -v- HMRC (Condé
Nast) disapplied the three year time limit for input tax claims in respect of
which the entitlement to deduct accrued before 1 May 1997.
HMRC consider that the terms of the judgment also apply to claims to recover
VAT overpaid or overdeclared in accounting periods ending before 4 December
As a result claims may now be made for:
- output tax overpaid or overdeclared in accounting periods ending before 4
- input tax in respect of which the entitlement to deduct arose in
accounting periods ending before 1 May 1997
Claims must be submitted to:
HM Revenue & Customs
'Fleming' Claims Team (Leeds)
Telephone enquiries in relation to the submission of claims or to claims that
have already been submitted to the Claims Team may be made on Tel 0113 389 4432.
Claims relating to accounting periods ending on or after 4 December 1996 (for
output tax) or 1 May 1997 (for input tax) are capped at three years.
Claims will now be paid, following verification, without the need to provide
an undertaking to repay HMRC.
Claimants who have had their claims paid on condition that they provide an
undertaking to repay in the event that the House of Lords found in favour of
HMRC, are released from those undertakings. No further action is required by
HMRC are still considering the full implications of the judgment and will
make a further announcement in due course.
In 1996 the government reduced the time limit for claiming overpaid VAT to
three years from the date of the overpayment. A similar three year time limit
was also introduced for input tax claims in 1997. Both provisions had
retrospective, as well as prospective, effect, ie they applied to claims that
arose in accounting periods both before and after the enactment of the
legislation. Neither contained transitional provisions to allow claims to be
made for a limited period under the old rules, before the new time limits came
The absence of such transitional arrangements was held to breach Community
law, in the ECJ judgment in Marks and Spencer plc in July 2002. In August and
October 2002, HMRC sought to remedy the position by introducing an
administrative transitional regime (Business Briefs 22/02 and 27/02). In January
2008 the House of Lords in Fleming and Condé Nast held that, in the absence of
transitional arrangements in 1997, the three year cap had to be disapplied for
input tax claims in respect of which the rights to deduct had accrued at 1 May
HMRC consider that the terms of the judgment are such that they cannot rely
on the administrative transitional regime introduced for output tax claims. They
accept that the three year cap must therefore be disapplied for such claims
where the rights had accrued at 4 December 1996.
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Article Published/Sorted/Amended on Scopulus 2008-02-23 16:06:09 in Tax Articles