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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 1996.


As a result claims may now be made for:

  • output tax overpaid or overdeclared in accounting periods ending before 4 December 1996
  • 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)
Queens Dock
L74 4AA

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 claimants.

Further announcement

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 into effect.

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 1997.

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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© Crown Copyright 2008.

A licence is need to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs under the terms of a Click-Use Licence. Tax briefs are updated regularly and may be out of date at time of reading.

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Article Published/Sorted/Amended on Scopulus 2008-02-23 16:06:09 in Tax Articles

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