Express Brands Ltd v HMRC: A Cautionary Tale on VAT Error Correction Time Limits
When it comes to VAT, deadlines matter — sometimes more than taxpayers realise. The recent First-tier Tribunal decision in Express Brands Ltd v HMRC [2025] UKFTT 1400 (TC) is a sharp reminder of the strict statutory time limits for correcting VAT return errors and the financial consequences of missing them.
What Went Wrong?
Express Brands Ltd operated sales through Amazon and was properly registered for VAT in the UK. However, the company failed to register for German VAT despite making sales to customers in Germany. As a result, it initially accounted for UK output VAT on these transactions.
Once the German VAT position came to light, the company retrospectively accounted for German VAT and then submitted claims to HMRC to recover the UK VAT that had been wrongly paid — a straightforward error correction in principle.
But there was a problem:
Some of the correction claims were submitted more than four years after the relevant UK VAT returns had been filed.
HMRC’s Position
HMRC accepted that the UK VAT had indeed been overpaid. However, it refused to make repayments for the periods that fell outside the statutory four-year error correction window.
The Taxpayer’s Argument
Express Brands argued that HMRC retained discretion under the secondary legislation to accept a late correction notice. They claimed this discretion could extend beyond the four-year statutory limit.
The Tribunal disagreed.
Tribunal Decision
The Tribunal held that:
Any discretion HMRC has must operate within the boundaries of primary legislation.
The primary legislation imposes a clear, strict four-year time limit for correcting VAT errors.
HMRC has no legal power to override that statutory limitation.
The appeal was therefore dismissed.
The Outcome
Express Brands now faces a costly outcome:
It must pay VAT twice on the same sales — once to the UK and once to Germany — simply because the correction was made too late.
The Tribunal noted the difficulty in understanding how the taxpayer failed to realise it had an issue within the four-year period. The judge suggested that misinterpretation of Amazon’s documentation may have contributed to the oversight.
Key Takeaways for Businesses
Time limits are absolute.
The four-year deadline for VAT error corrections is statutory and cannot be extended by HMRC discretion.Cross-border sales require heightened vigilance.
Marketplace sellers must understand their VAT obligations in each jurisdiction where goods are sold.Check marketplace documentation carefully.
Misunderstanding platform VAT data or reporting mechanisms can lead to significant tax exposure.Don’t delay error reviews.
Regular VAT health checks are essential to catch issues before deadlines expire.