5% problem

I have a client who trades as a general store and has only just realised that smoking cessation and contraceptive products are subject to VAT at 5% instead of 17.5%. He has always accounted for VAT at 17.5% in his retail scheme calculations.

He has asked me to calculate his overpayment — which I am happy to do — for the last three years and submit a disclosure to HMRC to recover the tax. However a colleague in my office said that this would be rejected by HMRC unless the retailer could repay all of this overpaid tax to his customers. This seems a strange comment but I want to make sure that there is not some validity in the point he is making.

Assuming that a claim could be made advice would be appreciated on how to submit the repayment claim to HMRC.

Query 17...