Supplement is due

The taxpayer company filed VAT returns for the periods 1/06 and 2/06 claiming repayment. It later realised it had under-claimed input tax so submitted voluntary disclosures for the periods to seek repayment of about £1.5m.

HMRC repaid the tax. The company received a 5% repayment supplement in relation to the tax repayable on the VAT returns because of the length of time involved.

The department refused to pay a supplement in respect of the £1.5m on the basis VAT credits claimed by means of voluntary disclosure were “not eligible for repayment supplement”.

The taxpayer appealed. It said repayment supplement was not limited to repayments claimed on a return according to VATA 1994 s 79 but also applied to claims made in other ways: by voluntary disclosure for example.

The Revenue stated that supplements could only could only be made on repayments arising from...