Refund of VAT used to cover PAYE due
Recent case. In March 2008 a VAT and Duties Tribunal ordered HMRC to pay £30,500 in costs to Xicom Systems Ltd after it won its case against the Taxman. However, an earlier county court judgment had been made in favour of HMRC and against Xicom for the sum of £104,654, relating to PAYE income tax and NI contributions owed to the Taxman.
Further appeal. HMRC wanted to set the money it owed the company against the PAYE the company owed it. The company appealed but the court agreed that HMRC were entitled to make the set-off in this case, but it did warn that it shouldn’t assume this would always be allowed in future.