PART 12 – REFUNDS AND REPAYMENTS OF TAX

Overview

This Part contains 7 sections on refund and repayment provisions (sections 99 to 105). The general rule is that where a registered trader’s VAT on purchases exceeds his or her VAT on sales, the excess is refunded. This is normally done on the basis of the trader’s 2-monthly VAT return. Claims must be made within 4 years. Traders who overpay VAT – due to a mistaken assumption in the operation of the tax – may be able to reclaim the VAT overpaid in certain circumstances, subject to an unjust enrichment provision. There are two sections dealing with refunds to foreign traders. One sets out the legislative basis for an electronic refund procedure for businesses operating from other EU Member States. The other provides for regulations to allow repayment of deductible Irish VAT suffered by non-EU based businesses.

The Part also covers Ministerial refund orders, refunds and repayments in certain circumstances and rules on when Revenue will pay interest on refunds of VAT.

99. General provisions on refund of tax

Summary

This section provides for repayment of VAT where input credit (VAT on purchases) exceeds output VAT (VAT on sales) liability. Claims for repayment must be made within 4 years of the relevant taxable period, and Revenue may pay the amount directly into the trader’s bank account. There is provision for deferring repayments to a trader about to enter a VAT group, where any group member’s tax affairs are not in order. There is also provision for requiring security from a taxpayer.

Details

(1) Subsection (1) provides for the ordinary case of repayment, that is, where the total of the tax suffered on inputs exceeds the gross liability for the period. In such a case, the excess is repayable and such repayment will normally be made on the basis of the two-monthly return sent by the person to the Collector-General. This is subject to subsections (2) and (3).

(2) Deferment of refund is provided for under subsection (2). Revenue are allowed to defer a repayment due to any person in a group registration for a period prior to the application of that group registration, where the tax affairs of one or more of the other persons involved are not in order.

(3) Revenue has the power to require security from a taxpayer, where they consider it necessary to do so for the protection of the revenue, as a condition for making a refund of VAT. The manner and form of such security will be decided by Revenue. The security would generally take the form of an insurance bond or bank guarantee. The amount of the guarantee cannot exceed the amount of the refund.

(4) A claim for a refund of tax must be made within 4 years after the end of the relevant taxable period.

Note that the time limits are shorter in respect of refund claims by foreign-based traders: Intra-Community refund claims from traders in other EU countries must be submitted by 30 September the following year – see section 101. Claims by non-EU based taxable persons under the Thirteenth Directive must be made within 6 months of the end of the calendar year in which the tax became chargeable – see section 102 and Regulation 37 of the 2010 VAT Regulations.

(5) Revenue may make VAT refunds to VAT-registered traders directly into a bank or building society account nominated by the trader. (This also applies to refunds on foot of unjust enrichment claims – see section 100.)

(6) Subsection (6) specifically provides that refunds of VAT can only be made under the provisions of the VAT Act or under secondary VAT legislation.

Relevant Date: Finance Act 2020