// Dixons Retail loses £1.8m VAT claim on bouncing cheques
// The tribunal head of the company had a bespoke retail scheme agreement (BRSA) for the purpose of accounting for VAT to HMRC
Dixons Carphone has lost £1.8 million due to overpaid VAT on bouncing cheques after failing at a First Tier Tribunal (FTT) appeal.
The retail group was previously known as Dixons Retail before merging with mobile phone retailer Carphone Warehouse in 2014.
The tribunal head of the company had a bespoke retail scheme agreement (BRSA) for the purpose of accounting for VAT to HMRC.
It was agreed that it paid over VAT to HMRC on sales for which it had received a cheque that was later dishonoured and that between December 1996 and February 2003, it did not reclaim this VAT.
Dixons found in September 2011 that this had occurred and made a claim to HMRC to recover the overpaid VAT.
HMRC rejected this claim on the basis that it was out of time, because it was a claim under s80 VATA 1994 and s80 claims are subject to the four-year cap.
Dixons appealed this decision but the appeal was held over pending a decision on a similar issue involving Leeds City Council. HMRC won the Leeds City Council case and Dixons withdrew its appeal.
Meanwhile, Dixons then adjusted its 2018 VAT return to recover the VAT overpaid on the dishonoured cheques on the grounds that its retail scheme contained no time limit by which adjustments should be made. The adjustment was for the amount of £1,876,141.
However, HMRC refused to accept the adjustment and the case went to appeal.