§ Mr. Matthew BanksTo ask the Chancellor of the Exchequer what steps he proposes to take to limit retrospective repayments of VAT and other indirect taxes and duties. [38693]
§ Mr. Heathcoat-AmoryThe Government have become concerned at the increasing amounts of revenue at risk in taxation boundary disputes, particularly VAT. Large sums, collected and paid in good faith, are being repaid to businesses, in some cases many years after the tax was collected and with no possibility that refunds will be passed on to final consumers. The Chancellor therefore asked Customs to undertake a review of the refund provisions applying to VAT and other indirect taxes. I am today announcing the outcome of that review.
I am proposing that with effect from today a three-year limit will be introduced for retrospective refund claims, applying to VAT and other indirect taxes, and to associated statutory interest. This will be subject to parliamentary approval.
I also propose to recommend changes to the unsatisfactory law on unjust enrichment. Draft legislation effecting these changes will be published shortly and will subsequently be included in the 1997 Finance Bill.