VAEC5160 - Recovery assessments: Section 80B(1) Example 1
The procedural guidance in this manual only covers the VAT Mainframe and VISION processes. For guidance on the Making Tax Digital and ETMP processes for fully migrated customers, see VAEC0200 and the Making Tax Digital for VAT compliance toolkit.
Section 80 claim where unjust enrichment does apply and the business enters into the reimbursement arrangements but fails to reimburse their customers.
Business has a 拢6,000 outstanding VAT debt on file and has wrongly deducted 拢2,000 input tax.
| 听 | 听 |
|---|---|
| Output tax over-accounted for | 拢10,000 |
| Input tax credit wrongly claimed | 拢2,000 |
| Net over-accounting | 拢8,000 |
| Outstanding VAT debt | 拢6,000 |
| Total credit | (拢10,000) |
| Amount reimbursed to customers | NIL |
In the above example, where unjust enrichment does apply and the business chooses to enter into the reimbursement arrangements then they will receive a net repayment of 拢2,000.
This amount is arrived at as follows;
拢10,000 over accounted for output tax less 拢2,000 input tax wrongly claimed less 拢6,000 offset against the debt leaving a net amount payable to the business.
The net amount remaining of 拢2,000 will be repaid to the business.
In the above example 拢10,000 has been credited to the business (拢6,000 to their VAT mainframe account, 拢2,000 in respect of the wrongly claimed input tax and 拢2,000 repaid) on condition that the full amount of 拢10,000 is reimbursed to their customers.
If the business fails to reimburse this amount then we must recover it from them. If we do not then they will have been unjustly enriched.
Therefore an assessment for 拢8,000 is made and notified to the business (under the provisions of Section 80B(1B)) to recover the amount credited to the business鈥檚 VAT mainframe account.
A further assessment for 拢2,000 is made (and notified to the business under the provisions of Section 80B(1)) to recover the amount actually repaid to the business.
These two assessments together recover the full amount of 拢10,000 credited to the business
The processing and notification procedures for Section 80B assessments are outlined at VAEC5120.