In Bratt Autoservices Company Limited v HMRC [2018] EWCA Civ 1106, the Court of Appeal (CA) found that a VAT reclaim for overpaid output VAT must specify the VAT return period to which it relates in order to be valid.

  • Bratt Autoservices are a vehicle rental and self-drive hire company.
  • Its solicitors made a ‘Fleming’ claim, two days before the revised claim deadline, for VAT dating back to its incorporation as a result of the unlawful 3 year time limit introduced by the Finance Act 1997.
  • The solicitors enclosed a copy of accounts for the year ended 31 December 1989 in support of the claim, and quantified that year’s claim at nearly £1.3 million, further claiming that this should be extrapolated backwards to previous years.
  • HMRC rejected the claim for all years on the basis that the claims did not refer to specific prescribed accounting periods (VAT quarters), so were invalid.

The First-Tier Tribunal (FTT) found in favour of the taxpayer, that legislation did not specifically require that the claims made refer to prescribed accounting periods to be valid.

The Upper Tribunal (UT) overturned the FTT decision deciding that the legislation governing the right to reclaims and repayments (section 80 of the VAT Act) was worded in such a way that did require VAT claimed to be allocated to individual prescribed periods in which excess VAT was accounted for.

In front of the CA the taxpayer no longer contended it had a valid claim for years prior to 31 December 1989 as it had not quantified any claim. The appeal was solely relating to whether a valid claim had been made for the year to 31 December 1989.

The CA upheld the UT decision:

  • If claims could be made without reference to prescribed accounting periods then it would be impossible in some cases to determine without full investigations whether part or all of a claim was time barred.
  • HMRC’s approach is strict but is consistent with the overall structure of the VAT system, i.e. the requirement to account for and pay VAT in relation to prescribed accounting periods.
  • As the taxpayer had made no attempt to allocate the total amount claimed into individual prescribed accounting periods, even on an estimated basis, the claim failed.


Reclaims and unjust enrichment

External link: Bratt Autoservices Company Limited v HMRC [2018] EWCA Civ 1106


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