In Dixons Retail Plc v HMRC [2019] TC07486, the appellant failed at a First Tier Tribunal (FTT) appeal in a bid to reclaim £1,876,141 of overpaid VAT on cheques which had been dishonoured, on the basis they were out of time for a refund.
It was agreed that Dixons overpaid VAT to HMRC on sales in the period from January 1997 to January 2003 for which it had received cheques that later bounced. In September 2011, Dixons found that this had occurred and made a claim to HMRC to recover the overpaid VAT.
- HMRC rejected this claim on the basis that it was out of time and subject to the four-year cap.
- Dixons appealed to the FTT. The appeal was held over pending a similar appeal on the Leeds City Council case which tested the legality of the time cap on claims. Dixons later withdrew its appeal when HMRC won the Leeds City Council case.
- Dixons then adjusted its 01/2018 VAT return to recover the VAT overpaid on the dishonoured cheques on the grounds that its retail scheme contained no time limit by which adjustments should be made.
- Dixons argued that the VAT retail scheme regime was a complete code and as there was no time limit specified in their bespoke scheme it could make the adjustment at any time. HMRC refused to accept the adjustment, and the case went to appeal.
The FTT rejected Dixons’ interpretation that the retail scheme had no implied time-limits. The tribunal concluded the retail scheme was not a complete code and that claims must meet the requirements of VAT legislation, including the four-year cap.
The FTT dismissed the appeal.
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Dixons Retail Plc v HMRC [2019] UKFTT 714, TC07486
Leeds City Council v HMRC [2015] EWCA Civ 1293