HMRC have announced in Revenue and Customs Brief 31/08 that a new clause has been introduced into the Finance Bill the purpose of which is to close off a potential avoidance opportunity that has arisen as a result of the recent judgment of the Court of Appeal in the case of Midlands Co-operative Society in which the Court held that a right to make a claim for overpaid or overdeclared VAT can be transferred, assigned or sold.
HMRC saw that an avoidance opportunity could arise in cases where a right to make a claim had been transferred, as the provisions relating to set-off of these claims against debts on file and the unjust enrichment provisions did not apply to the person who had taken over the right to make a claim. The new legislation addresses this issue by providing that the amount due from HMRC on a claim on a transferred right will be determined by first setting off the amount of the outstanding liabilities of the original creditor and then any liabilities of the current creditor.
For further information contact Dean Carey on 01473 220022, or email dean.carey@ensors.co.uk
