Not too late to claim

An outbreak of foot and mouth disease occurred in the UK in 2001. The Department for Environment Food and Rural Affairs (DEFRA) was responsible for controlling and eradicating the disease.

It sought help in dealing with the outbreak from the appellant Cumbria County Council (CCC) which council subsequently invoiced DEFRA for supplies made in connection with the outbreak between March and November 2001. VAT was accounted on them.

DEFRA did not agree it was liable for the whole amount so paid only part of the bill. The department and CCC eventually made a settlement under which DEFRA agreed to pay £200 000.

CCC had accounted for VAT on £1.1 million more than it received from DEFRA because the council believed it was entitled to bad debt relief of £222 103. In February 2008 CCC made a voluntary disclosure for the recovery of the sum.

HMRC...