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Overseas expenses

15 December 2015
Issue: 4531 / Categories: Tax cases , Admin

Ppig Ltd (TC4665)

For many years the sole director of Ppig believed that he could claim on his UK VAT return VAT paid on business expenses incurred in other EU countries where he worked as a mechanical engineer. In fact only VAT incurred on UK expenses qualifies as input tax on a UK VAT return. After a VAT compliance visit by HMRC the officer raised an assessment for £67 168 plus interest for the quarterly tax periods from March 2010 to June 2013 and explained to him that he should have claimed the VAT on his overseas expenses through the EU refund system.

However under that system claims must be made within nine months of the end of a calendar year – any later claims are time barred. As a result the taxpayer was time-barred for the three years from 2010 to 2012.

The First-tier Tribunal expressed sympathy...

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