Risk & Economy » Tax » Business wins more time for VAT refunds

(Accountancy Age) Business will get more time to claim VAT refunds despite senior Treasury figures warning it will cause the taxman severe problems.

After a shift from paper to electronic filing of claims, there will now be a one-off six-month extension for cross-border refunds from 30 September 2010 to 31 March 2011.

However, the exchequer secretary, David Gauke, told the House of Commons European scrutiny committee earlier this year that the extension would involve costly IT changes for the taxman and advisers.

Gauke’s statement also said that it would “create operational problems for HMRC, as it has deployed additional resources to deal with the anticipated surge in refund claims ahead of the September 2010 deadline.”

And it would confuse EU businesses “as it is very unlikely that any Member State would be able to change their IT systems to accept late claims before the current 30 September deadline expires.”

Gauke told the panel that the proposed extension to the deadline would impose additional IT costs on HMRC of between £100,000 and £150,000 (and could not be implemented in time). It would also impose unquantified costs on advisers.

HMRC said: “We have supported this proposal, as although the UK (HMRC) VAT refund portal has been operating properly, some UK businesses have either not yet been able to submit their claims to the appropriate Member State of refund, or their claims has not yet been accepted into the other Member States’ portals.