October 29th, 2012 / Insight posted in

Claiming back overpaid VAT

BN writes: I have been running a small family business for 20 years and we sold the trade last summer. We deregistered from Vat at the same time. We intended to sort out the loose ends and then liquidate the company and return its assets to its shareholders. Resolving the outstanding issues has taken longer than we expected, though, and in the process we have incurred some Vat on overheads even though the company has not yet been liquidated. Is it possible to reclaim this Vat? We have also discovered that we made a mistake in our final return last year and overstated our Vat liability. Can we ask for a refund?

Once you have deregistered for Vat there are some occasions when you can still claim Vat incurred on costs, writes Chris Lane a partner in Kingston Smith LLP. You will not be able to claim for the Vat incurred on general overheads on running the business after deregistering, however. You will be able to claim back the Vat on professional costs solely incurred during your original business activities (any previous partial exemption would still apply). There is a time limit of three years for claims.

As far as the overpaid Vat is concerned, you should still be able to correct the error and get a refund if it is within three years since you deregistered.

You should write to your Vat office and make a disclosure, giving them the full details of your error. Send them all the details you have, explaining how the error occurred. You may need to submit invoices to support your claim.