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VAT: Overpayments

Volume 496: debated on Monday 20 July 2009

To ask the Chancellor of the Exchequer what estimate he has made of (a) the monetary value of claims lodged with HM Revenue and Customs for repayment of overpaid value added tax arising as a result of the decision of the House of Lords in the cases of Fleming and Conde Nast and (b) the amount paid out by HM Revenue and Customs in respect of such claims. (282981)

[holding answer 29 June 2009]: The Government have already made prudent provision in the public finances to represent tax and interest that might be repaid following this ruling.

The total value of claims received by HM Revenue and Customs (HMRC) as a result of the House of Lords decision in the joined cases of Michael Fleming t/a Bodycraft and Condé Nast Publications Ltd. is estimated at around £8.5 billion. Past experience of such claims suggests that many will prove either to be speculative, incorrect or otherwise overstated.

In those cases so far verified by HMRC, around half the amount claimed by tax value has been refused following verification, and around £1.5 billion in tax and interest has been repaid to date. HMRC is also ensuring that taxpayers bring to account any direct tax liabilities created as a result of these repayments.

The provision for future repayments of tax and associated interest will be reviewed and adjusted as necessary, to reflect HMRC’s continuing experience in verifying these claims.