In HBOS & Lloyds Banking Group [2021] UKFTT 307 (TC) (4 September 2021) the FTT held that HMRC was not liable to pay interest on VAT bad debt relief in relation to periods before that relief had been claimed. The VAT bad debt relief rules previously include conditions that were contrary to EU law but this was not appreciated until a court judgment many years later. A claim to interest on overpaid VAT under VATA 1994 s 78 requires the VAT overpayment (or here the delayed VAT repayment) to have been caused by HMRC error and in this case the cause was not HMRC’s error but the non-EU compliant condition in the legislation.
In HBOS & Lloyds Banking Group [2021] UKFTT 307 (TC) (4 September 2021) the FTT held that HMRC was not liable to pay interest on VAT bad debt relief in relation to periods before that relief had been claimed. The VAT bad debt relief rules previously include conditions that were contrary to EU law but this was not appreciated until a court judgment many years later. A claim to interest on overpaid VAT under VATA 1994 s 78 requires the VAT overpayment (or here the delayed VAT repayment) to have been caused by HMRC error and in this case the cause was not HMRC’s error but the non-EU compliant condition in the legislation.
