§ Lord Brougham and Vaux
asked Her Majesty's Government:
What compensatory payment Customs and Excise make to traders when a court or a VAT tribunal has decided that value added tax was incorrectly charged.
The Earl of Caithness
Section 40(4) of the Value Added tax Act 1983 provides that, when a tribunal decides that VAT should not not have been charged by Customs, a compensatory payment of interest should be made in addition to repayment of the tax itself. Interest is also payable by order of a court. In cases analogous with those where such a finding has been reached, Customs make ex-gratia payments in lieu of interest.
All of these payments fall as a charge on subheading B1 of class XIX Vote 2. A recent case where the House of Lords found against Customs is considered to be applicable to a substantial number of similar cases in which Customs had previously refused full repayment. As a result, some significant costs will be incurred in 1989–90. These costs are currently being assessed and will be reflected in a Spring Supplementary Estimate which will be presented to Parliament.