An Italian bank had to take the tax authorities to the European court because the VAT man would not return VAT overpaid by the bank due to their own vascillation on the meaning of the rules.  The bank had charged its client on VATable services given the then current view of the tax authorities.  Four years later, the tax authorities changed their mind that the services were VATable.  The bank’s client sued the bank to recover overpaid VAT in the civil courts and the bank subsequently requested a  reimbursement of VAT.  The tax authorities refused the reimbursement and argued that the bank was out of time to reclaim it, there being a two year limit.  In fact the bank had no chance to reclaim it because the VAT authorities changed their mind about the treatment after the limit to repay.  The EU court found for the bank but the moral of this story is beware!  In the UK the limit for reclaiming overpayments of VAT is 4 years and yet the civil limit for redress is six years….

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