VAT return issue costs Anglian Water millions

VAT return issue costs Anglian Water millions

Anglian Water’s attempt to force HM Revenue & Customs (HMRC) to return £12 million in overpaid VAT has been rejected by the courts.

Anglian serves six million properties in the UK, making it one of the country’s largest water suppliers.

Despite HMRC accepting that the utility business had overpaid VAT for six years, it has argued that it should not have to return the amount due to the fact that it would “unjustly enrich” the utility supplier.

This was in part due to the fact that Anglian had already passed on the additional cost of VAT to its customers via higher charges.

Anglian appealed against HMRC’s decision but was rejected by two tax courts, including a defeat in December 2018 at the Upper Tribunal.

During the hearing, Anglian claimed that despite seeming to benefit from the repayment, it would have passed on some of the money to its customers through a reduction in their bills or reinvested it in the business.

The overpayment relates back to charging VAT on infrastructure charges to its customers. These charges are levied when connecting a building to its water supply but HMRC has agreed that these should not have been subject to VAT at the time they was charged.

The spokesman for Anglian said: “The court has agreed with HMRC’s position and we accept that decision.”

This case not only highlights the complexities and evolving nature of the UK’s VAT regime, but also the importance of constantly reviewing your affairs to ensure overpayment does not occur. To find out how we can help with your current VAT arrangements, please contact us.