Repayment of overpaid VAT is not automatic. HMRC need not make a repayment unless a qualifying claim is made.

A trader’s VAT return may show a net repayment for reasons such as:

(1)his supplies were generally not positive-rated but he has reclaimable input tax, e.g. an exporter of goods;

(2)he purchased some expensive equipment (e.g. a van) or makes a large claim for input tax concerning goods-on-hand at registration;

(3)he built up a large stock of goods in preparation for the start of the season;

(4)he underdeclared his output tax or overdeclared his input tax or both; and

(5)he traded at a gross loss, i.e. goods were supplied at a price below their cost, e.g. during a sale.

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