VAT ‘Fleming’ Claims – Offset

In a highly technical case concerning the Birmingham Hippodrome, the Upper Tribunal has decided that it is not possible for a claim to be made for the period preceding 1996 when, if all periods, including those post dating 1996, were taken into account, the taxpayer would owe money to HMRC.

In this particular case the opportunity for Birmingham Hippodrome to claim £1m of over-declared VAT presented itself when the three year cap was suspended for periods before 1996. However, had the three year cap been suspended for all periods, the Birmingham Hippodrome would have owed HMRC £2m for the period post dating 1996 in which it had claimed a large amount of VAT on the basis that its services were taxable. Although HMRC could not assess VAT in that period (because of the cap) it argued against the view that it should pay a further £1m to Birmingham Hippodrome for the historical period given that there was an offsetting amount albeit behind the wall of the