Value Added Tax Act 1994, section 80

Credit for, or repayment of, overstated or overpaid VAT

Part IV Administration, collection and enforcement

[F688 (1)Where a person—

(a)has accounted to the Commissioners for VAT for a prescribed accounting period (whenever ended), and

(b)in doing so, has brought into account as output tax an amount that was not output tax due,

the Commissioners shall be liable to credit the person with that amount.

(1A)Where the Commissioners—

(a)have assessed a person to VAT for a prescribed accounting period (whenever ended), and

(b)in doing so, have brought into account as output tax an amount that was not output tax due,

they shall be liable to credit the person with that amount.

(1B)Where a person has for a prescribed accounting period (whenever ended) paid to the Commissioners an amount by way of VAT that was not VAT due to them, otherwise than as a result of—

(a)an amount that was not output tax due being brought into account as output tax, or

(b)an amount of input tax allowable under section 26 not being brought into account,

the Commissioners shall be liable to repay to that person the amount so paid.F688]

(2)The Commissioners shall only be liable to [F689credit orF689] repay an amount under this section on a claim being made for the purpose.

[F690 (2A)Where—

(a)as a result of a claim under this section by virtue of subsection (1) or (1A) above an amount falls to be credited to a person, and

(b)after setting any sums against it under or by virtue of this Act, some or all of that amount remains to his credit,

the Commissioners shall be liable to pay (or repay) to him so much of that amount as so remains.F690]

(3)It shall be a defence, in relation to a claim [F691under this section by virtue of subsection (1) or (1A) above, that the creditingF691] of an amount would unjustly enrich the claimant.

[F692 (3A)Subsection (3B) below applies for the purposes of subsection (3) above where—

(a) an amount would (apart from subsection (3) above) fall to be credited under subsection (1) or (1A) above to any person (“the taxpayer”), and

(b)the whole or a part of the amount brought into account as mentioned in paragraph (b) of that subsection has, for practical purposes, been borne by a person other than the taxpayer.F692]

(3B)Where, in a case to which this subsection applies, loss or damage has been or may be incurred by the taxpayer as a result of mistaken assumptions made in his case about the operation of any VAT provisions, that loss or damage shall be disregarded, except to the extent of the quantified amount, in the making of any determination—

(a)of whether or to what extent the [F693creditingF693] of an amount to the taxpayer would enrich him; or

(b)of whether or to what extent any enrichment of the taxpayer would be unjust.

(3C)In subsection (3B) above—

  • “the quantified amount” means the amount (if any) which is shown by the taxpayer to constitute the amount that would appropriately compensate him for loss or damage shown by him to have resulted, for any business carried on by him, from the making of the mistaken assumptions; and

  • “VAT provisions” means the provisions of—

    (a)

    any enactment [F694or subordinate legislationF694] (whether or not still in force) which relates to VAT or to any matter connected with VAT; or

    (b)

    any notice published by the Commissioners under or for the purposes of any such enactment or subordinate legislation.

[F695 (4)The Commissioners shall not be liable on a claim under this section—

(a)to credit an amount to a person under subsection (1) or (1A) above, or

(b)to repay an amount to a person under subsection (1B) above,

if the claim is made more than [F696 4 yearsF696] after the relevant date.

(4ZA)The relevant date is—

(a)in the case of a claim by virtue of subsection (1) above, the end of the prescribed accounting period mentioned in that subsection, unless paragraph (b) below applies;

(b)in the case of a claim by virtue of subsection (1) above in respect of an erroneous voluntary disclosure, the end of the prescribed accounting period in which the disclosure was made;

(c)in the case of a claim by virtue of subsection (1A) above in respect of an assessment issued on the basis of an erroneous voluntary disclosure, the end of the prescribed accounting period in which the disclosure was made;

(d)in the case of a claim by virtue of subsection (1A) above in any other case, the end of the prescribed accounting period in which the assessment was made;

(e)in the case of a claim by virtue of subsection (1B) above, the date on which the payment was made.

In the case of a person who has ceased to be registered under this Act, any reference in paragraphs (b) to (d) above to a prescribed accounting period includes a reference to a period that would have been a prescribed accounting period had the person continued to be registered under this Act.

(4ZB)For the purposes of this section the cases where there is an erroneous voluntary disclosure are those cases where—

(a)a person discloses to the Commissioners that he has not brought into account for a prescribed accounting period (whenever ended) an amount of output tax due for the period;

(b)the disclosure is made in a later prescribed accounting period (whenever ended); and

(c)some or all of the amount is not output tax due.F695]

[F697 (4A)Where—

(a)an amount has been credited under subsection (1) or (1A) above to any person at any time on or after 26th May 2005, and

(b)the amount so credited exceeded the amount which the Commissioners were liable at that time to credit to that person,

the Commissioners may, to the best of their judgement, assess the excess credited to that person and notify it to him.F697]

[F698 (4AA)An assessment under subsection (4A) shall not be made more than 2 years after the later of—

(a)the end of the prescribed accounting period in which the amount was credited to the person, and

(b)the time when evidence of facts sufficient in the opinion of the Commissioners to justify the making of the assessment comes to the knowledge of the Commissioners.F698]

F699(4C). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)A claim under this section shall be made in such form and manner and shall be supported by such documentary evidence as the Commissioners prescribe by regulations; and regulations under this subsection may make different provision for different cases.

[F700 (7)Except as provided by this section F701..., the Commissioners shall not be liable to credit or repay any amount accounted for or paid to them by way of VAT that was not VAT due to them.F700]

Definitions used in section 80 14

the Commissioners

“the Commissioners” means the Commissioners of Customs and Excise;

Defined in s.96(1) · see it in the full Act
VAT

“VAT” means value added tax charged in accordance with this Act;

Defined in s.96(1) · see it in the full Act
prescribed accounting periods

account for and pay VAT by reference to such periods (in this Act referred to as “prescribed accounting periods”) at such time and in such manner as may be determined by or under regulations and regulations may make different provision for different circumstances.

Defined in s.25(1) · see it in the full Act
prescribed accounting period

“prescribed accounting period” has the meaning given by section 25(1);

Defined in s.96(1) · see it in the full Act
output tax

“output tax” has the meaning given by section 24;

Defined in s.96(1) · see it in the full Act
the credit

(4A) Subsection (3) above shall not require any such amount as is mentioned in paragraph (a) of that subsection (“the credit”) to be set against any such sum as is mentioned in paragraph (b) of that subsection (“the debit”) in any case where—

(a)an insolvency procedure has been applied to the person entitled to the credit;

(b)the credit became due after that procedure was so applied; and

(c)the liability to pay the debit either arose before that procedure was so applied or (having arisen afterwards) relates to, or to matters occurring in the course of, the carrying on of any business at times before the procedure was so applied.

Defined in s.81(4A) · see it in the full Act
input tax

“input tax” has the meaning given by section 24;

Defined in s.96(1) · see it in the full Act
incurred

(2) Schedule 11A (disclosure of avoidance schemes) has effect as if the reference to VAT “incurred” by a taxable person in paragraph 2A(1)(b) included VAT on the acquisition by the person of any goods from a member State.

Defined in Sch.9ZA para.72(2) · see it in the full Act

(b) the references to VAT “incurred” by a taxable person in paragraphs 6(1)(b) and 36(7)(b) included VAT on the acquisition by the person of any goods from a member State.

Defined in Sch.9ZA para.79 · see it in the full Act
business

(1) In this Act “business” includes any trade, profession or vocation.

Defined in s.94(1) · see it in the full Act
subordinate legislation

“subordinate legislation” has the same meaning as in the Interpretation Act 1978 ;

Defined in s.96(1) · see it in the full Act
connected

(a) a person is “connected” with a director if that person is the director's spouse or civil partner, or is a relative, or the spouse or civil partner of a relative, of the director or of the director's spouse or civil partner;

Defined in Sch.9ZB para.17(8) · see it in the full Act

(5) Section 1122 of the Corporation Tax Act 2010 (“connected” persons) applies for the purpose of determining whether a person is connected with another for the purposes of this paragraph.

Defined in Sch.9ZA para.9(5) · see it in the full Act

(a) a person is “connected” with a director if that person is the director's spouse or civil partner, or is a relative, or the spouse or civil partner of a relative, of the director or of the director's spouse or civil partner;

Defined in s.18A(4A) · see it in the full Act
relevant

(b) when specifying a body under paragraph (a), specify any museum or gallery that, for the purposes of this section, is a “relevant” museum or gallery in relation to the body;

Defined in s.33A(9) · see it in the full Act
subsection (1) above

(a) the reference in subsection (2) to “subsection (1) above” were to “subsection (1) and paragraph 24(1) of Schedule 9ZA”;

Defined in Sch.9ZA para.24(2) · see it in the full Act

(b) the reference in subsection (2A) to “subsection (1) above” were to “subsection (1) or paragraph 24(1) of Schedule 9ZA”.

Defined in Sch.9ZA para.24(2) · see it in the full Act
regulations

“regulations” means regulations made by the Commissioners under this Act;

Defined in s.96(1) · see it in the full Act

Cases considering section 80 79

The Advocate General representing the Commissioners of Her Majesty’s Revenue and Customs v K E Entertainments Ltd

[2020] UKSC 28 · 24 June 2020Limits

Provides the exclusive statutory route for crediting or repaying VAT accounted for when it was not due. Excess VAT produced by the incorrect game-by-game calculation fell within this route and was subject to its limitation provisions (see paras [17]-[18]; [24]-[26]; [41]). Applies where a person has brought into account as output tax an amount that was not due. The excess produced by the game-by-game calculation met that description (see paras [17]; [24]; [41]). Requires a claim before HMRC becomes liable to credit or repay an amount under section 80. The business brief invited such claims rather than adjustments for a decrease in consideration (see paras [17]; [64]-[67]). Provides the unjust-enrichment defence to a section 80 claim. The business brief’s reference to that defence confirmed that it invited section 80 claims rather than regulation 38 adjustments (see paras [17]; [66]). Bars section 80 claims made more than three years after the relevant date. It prevented recovery of the excess VAT attributable to the earlier accounting periods (see paras [18]; [24]-[26]; [41]). Makes section 80 the exclusive basis on which HMRC is liable to credit or repay VAT that was not due. It prevented the taxpayer from avoiding the time limit by recharacterising the claim as an adjustment (see paras [17]; [24]; [41]).

Commissioners for Her Majesty’s Revenue and Customs v Taylor Clark Leisure Plc

[2018] UKSC 35 · 11 July 2018Interprets

HMRC’s liability to credit over-declared output tax is owed to the person who accounted for that VAT. In an extant VAT group, section 43 identifies that person as the representative member (see paras [28]-[30]). HMRC becomes liable to credit or repay only when a claim is made for repayment to the person who accounted for the VAT. Unless the right has been assigned, a group claim must therefore be made by the current representative member or its agent (see paras [28]-[30]). The unjust-enrichment defence refers to enrichment of the claimant and supports the construction that the claimant is ordinarily the person who accounted for the VAT (see para [29]). The subsection’s time-limit language supports the construction that a claim results in credit or repayment to the person who originally accounted for or paid the VAT (see para [29]).

Littlewoods Limited and others v Commissioners for Her Majesty’s Revenue and Customs

[2017] UKSC 70 · 1 November 2017Limits

The section provides the specific and exclusive route for crediting or repaying VAT which was not due, subject to statutory defences and limitation rules (see paras [17]-[24]). The provision identifies repayments falling within section 78(1)(a), linking the repayment and interest regimes (see paras [25]; [31]). The subsection supplies HMRC with a defence where crediting the overpayment would unjustly enrich the claimant. That limitation supports the exclusivity of the statutory regime (see paras [20]; [22]-[23]). The subsection imposes a shorter and more certain limitation period intended to protect public finances. Its purpose supports exclusion of concurrent common law remedies (see paras [18]-[23]). The subsection expressly excludes non-statutory routes for repayment of VAT which was not due. It does not by itself necessarily exclude a distinct claim for the use value of the money (see paras [23]; [28]).

59 more judgments, and what each says about section 80, are in the case-law panel in the full Act.

Amendments and notes

16 notes from legislation.gov.uk

Amendments

  1. F687S. 80 side-note substituted (with effect in accordance with s. 4(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), s. 3(11)
  2. F688S. 80(1)-(1B) substituted for s. 80(1) (with effect in accordance with s. 4(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), s. 3(2)
  3. F689Words in s. 80(2) inserted (with effect in accordance with s. 4(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), s. 3(3)
  4. F690S. 80(2A) inserted (with effect in accordance with s. 4(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), s. 3(4)
  5. F691Words in s. 80(3) substituted (with effect in accordance with s. 4(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), s. 3(5)
  6. F692S. 80(3A) substituted (with effect in accordance with s. 4(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), s. 3(6)
  7. F693Word in s. 80(3B)(a) substituted (with effect in accordance with s. 4(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), s. 3(7)
  8. F694Words in s. 80(3C) substituted (31.12.2020) by Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 71(2) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  9. F695S. 80(4)(4ZA)(4ZB) substituted for s. 80(4) (with effect in accordance with s. 4(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), s. 3(8)
  10. F696Words in s. 80(4) substituted (1.4.2009) by Finance Act 2008 (c. 9), s. 118(2), Sch. 39 para. 36; S.I. 2009/403, art. 2(1) (with art. 6)
  11. F697S. 80(4A) substituted for s. 80(4A)(4B) (with effect in accordance with s. 4(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), s. 3(9)
  12. F698S. 80(4AA) inserted (retrospective to 19.3.2008) by Finance Act 2008 (c. 9), s. 120(3)(5)
  13. F699S. 80(4C) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(10)
  14. F700S. 80(7) substituted (with effect in accordance with s. 4(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), s. 3(10)
  15. F701Words in s. 80(7) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 71(3) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.

Modifications

  1. C62S. 80(4) modified (retrospective to 19.3.2008) by Finance Act 2008 (c. 9), s. 121(1)(4)