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Unjust enrichment defence (s.80 claim)

 

"(3)     It shall be a defence, in relation to a claim under this section by virtue of subsection (1) or (1A) above, that the crediting of an amount would unjustly enrich the claimant." (VATA 1994, s.80(3))

 

Loss to the taxpayer through damage to business as a result of overcharging VAT to be taken into account only to the extent it is quantified and proven

"(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.

 

(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 crediting 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."  (VATA 1994, s.80(3A) - (3B))

 

Quantified amount

" “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;" (VATA 1994, s.80(3C))

Meaning of VAT provisions

“VAT provisions” means the provisions of—

(a)     any enactment, subordinate legislation or Community legislation (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." (VATA 1994, s.80(3C))

Unjust enrichment defence (s.80 claim)

Reimbursing customers to avoid unjust enrichment defence

 

Arrangements may only be taken into account in considering whether the claimant would be unjustly enriched if they comply with regulations

"Without prejudice to regulation 43H below, for the purposes of section 80(3) of the Act (defence by the Commissioners that crediting by them of an amount claimed would unjustly enrich the claimant) reimbursement arrangements made by a claimant shall be disregarded except where they—

(a)     include the provisions described in regulation 43C below; and

(b)     are supported by the undertakings described in regulation 43G below." (SI 1995/2518, r.43A)

Mandatory provisions

"The provisions referred to in regulation 43B(a) above are that—

(a)     reimbursement for which the arrangements provide will be completed by no later than 90 days after the crediting of the amount to which it relates;

(b)     no deduction will be made from the relevant amount by way of fee or charge (howsoever expressed or effected);

(c)     reimbursement will be made only in cash or by cheque;

(d)     any part of the relevant amount credited to the claimant that is not reimbursed by the time mentioned in paragraph (a) above will be notified by the claimant to the Commissioners;

(da)     any part of the relevant amount paid (or repaid) to the claimant that is not reimbursed by the time mentioned in paragraph (a) above will be repaid by the claimant to the Commissioners;

(e)     any interest paid by the Commissioners on any relevant amount paid (or repaid) by them will also be treated by the claimant in the same way as the relevant amount falls to be treated under paragraphs (a) and (b) above; and

(f)     the records described in regulation 43E below will be kept by the claimant and produced by him to the Commissioners, or to an officer of theirs in accordance with regulation 43F below." (SI 1995/2518, r.43C)

Time limit for notifying and repaying unused amounts

"The claimant shall give any notification to the Commissioners that he is required to give by virtue of regulation 43C(d) above and, without any prior demand, make any repayment to the Commissioners that he is required to make by virtue of regulation 43C(da) and (e) above within 14 days of the expiration of the 90 days referred to in regulation 43C(a) above." (SI 1995/2518, r.43D)

Required records

"The claimant shall keep records of the following matters—

(a)     the names and addresses of those consumers whom he has reimbursed or whom he intends to reimburse;

(b)     the total amount reimbursed to each such consumer;

(c)     the amount of interest included in each total amount reimbursed to each consumer;

(d)     the date that each reimbursement is made." (SI 1995/2518, r.43E)

Production of records

"(1)     Where a claimant is given notice in accordance with paragraph (2) below, he shall, in accordance with such notice produce to the Commissioners, or to an officer of theirs, the records that he is required to keep pursuant to regulation 43E above.

(2)     A notice given for the purposes of paragraph (1) above shall—

(a)     be in writing;

(b)     state the place and time at which, and the date on which the records are to be produced; and

(c)     be signed and dated by the Commissioners, or by an officer of theirs,

and may be given before or after, or both before and after the Commissioners have [credited]2 the relevant amount to the claimant." (SI 1995/2518, r.43F)

Mandatory undertakings

"(1)     Without prejudice to regulation 43H(b) below, the undertakings referred to in regulation 43B(b) above shall be given to the Commissioners by the claimant no later than the time at which he makes the claim for which the reimbursement arrangements have been made.

 

(2)     The undertakings shall be in writing, shall be signed and dated by the claimant, and shall be to the effect that—

(a)     at the date of the undertakings he is able to identify the names and addresses of those consumers whom he has reimbursed or whom he intends to reimburse;

(b)     he will apply the whole of the relevant amount credited to him, without any deduction by way of fee or charge or otherwise, to the reimbursement in cash or by cheque, of such consumers by no later than 90 days after his receipt of that amount (except insofar as he has already so reimbursed them);

(c)     he will apply any interest paid to him on the relevant amount paid (or repaid) to him wholly to the reimbursement of such consumers by no later than 90 days after his receipt of that interest;

(d)     he will notify the Commissioners of the whole or such part of the relevant amount credited to him as he fails to apply in accordance with the undertakings mentioned in sub-paragraphs (b) and (c) above;

(da)     he will repay to the Commissioners without demand the whole or such part of the relevant amount paid (or repaid) to him or of any interest paid to him as he fails to apply in accordance with the undertakings mentioned in sub-paragraphs (b) and (c) above;

(e)     he will keep the records described in regulation 43E above; and

(f)     he will comply with any notice given to him in accordance with regulation 43F above concerning the production of such records." (SI 1995/2518, r.43G)

Reimbursing customers to avoid unjust enrichment defence
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