Four-year cap works both ways

The taxpayer business claimed a repayment of VAT which it had overpaid in error. HMRC refused the claim on the basis the tax related to accounting periods outside the four-year time limit in which repayment claims could be made.

The taxpayer appealed.

The overpayment came to light when the taxpayer discovered in 2010 that a problem with its accounting software meant input tax on invoices processed in the last quarter of the year but paid later were not included in the VAT return.

This resulted in an overpayment in the first return of the first quarter of the new year. The error which had been going on since 2000 was identified by neither the taxpayer’s advisers nor HMRC which had made two separate VAT inspections.

The First-tier Tribunal said it did not have the...