In Compass Contract Services Ltd v HMRC3 , the Advocate General has opined that it is permissible under EU law for national limitation periods for claiming overpaid output tax to vary from those applicable to input tax claims.


Compass Contract Services Ltd supplied cold food. It discovered in 2006 that it had wrongly accounted for output tax in respect of certain cold food items and made historic “Fleming” claims4 for repayment of output tax and deduction of input tax. HMRC rejected parts of these claims on the basis that the relevant limitation period had expired. At the relevant time following the Fleming litigation, claims for overpaid output tax were limited to periods ending before 4 December 1996, but input tax claims could be made for periods ending before 1 May 1997.

Compass contended that the less favourable limitation period on output tax was contrary to EU law.

The FTT referred the question to the Court of Justice of the European Union (CJEU).

Advocate General’s opinion

The Advocate General’s view was that the domestic limitation period was permissible under EU law. The Advocate General said that there was a conceptual difference between a person claiming a late deduction of input tax to a person claiming a refund of overpaid VAT. The right to deduct input tax being a fundamental principle of VAT established by the VAT Directives, was designed to achieve the neutrality of taxation of all economic activities. In contrast, the right to recovery of overpaid VAT did not derive from VAT Directives, but rather from general EU law.


It remains to be seen whether the CJEU will follow the Advocate General’s opinion. The decision will be keenly awaited for those taxpayers who have submitted claims spanning these dates.

A copy of the Opinion can be found here.