Correct to refuse

The three-year cap on VAT repayment claims

In 2007 and 2009 the taxpayer a local government authority claimed a repayment of VAT which it said it had wrongly paid on various supplies. HMRC agreed to repay the VAT for which the taxpayer had accounted before December 1996 but not VAT accounted for after that date. It cited VATA 1994 s 80(4) which came into force in December 1996 and imposed a three-year time limit for reclaiming VAT.

The Upper Tribunal (Tax and Chancery Chamber) upheld the Revenue’s position. The taxpayer appealed saying the restriction was contrary to EU law.

Lord Justice Lewison delivered the Court of Appeal’s judgment. He said the fact that the EU legislation (article 4.5 of the Sixth Directive) relating to local authorities carrying out their duties was difficult to understand or apply did not justify an extension of the...