The payback and clawback regulations are an important part of the VAT legislation to ensure that input tax claims made by a business are correctly adjusted when it changes its intentions from making ‘taxable’ to ‘exempt’ supplies or vice versa. I will explain how they work in this article. However unbeknown to me until a few weeks ago a business can only make a ‘payback’ adjustment on its next VAT return if it gets HMRC’s written approval. This is where extra VAT is claimed from HMRC. Surprise surprise no approval is needed to repay input tax to HMRC ie the business makes a ‘clawback’ adjustment. I didn’t realise this. But hang on I hear readers say isn’t HMRC currently taking many months to reply to a letter? How long will we have to wait for our money?
I will also share another...
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