Chaguanas used-car dealer gets VAT refund, interest

GETTING VAT (value-added tax) refunds can be problematic for the business community.

But one used-car dealer from Chaguanas has successfully received over $1.2 million in refunds owed to his company, as well as interest.

After years of protracted litigation and negotiations, the Board of Inland Revenue (BIR) withdrew an assessment for $$951,813.09, which was said to be how much the dealer owed, plus interest and penalties.

The BIR agreed to repay VAT refundsof $1,298,382.72 and $103,011.96.

It has since issued two cheques to the car dealer for the VAT refund and the interest on it.

The second-hand car dealer has asked for his name and that of his company not to be used because of the current crime situation, as he does not want his business or his family targeted.

His claim was filed in the High Court in 2021 by his attorney Ravi Dolsingh after the matter was taken to the Tax Appeal Board to argue against the BIR’s assessments.

Initially, the BIR refused to repay the VAT refunds, but it eventually withdrew the assessments, including the penalties and interest.

The dealer filed an action in the High Court for recovery of the interest and the BIR agreed to part of the claim for interest, which was accepted, although it was substantially less.

The court granted a judgment on admission against the BIR in late 2021 for the payment of $103,011.96. In March, the dealer received the refund and interest the BIR owed.

According to the claim filed in the High Court, during the VAT periods from May 2006-May 2014, the dealer overpaid, resulting in a number of refunds becoming due and payable.

In March 2015, he paid $282,324.66, based on a wrong assessment, and this was eventually withdrawn.

The claim said the BIR had a statutory duty, covered by section 39(A) of the Value Added Tax Act, to refund any overpayment of VAT and interest.

“The defendant initially refused to repay the VAT refunds due to the claimant without any justification for same, in law or in fact.”

In 2017, the BIR agreed to repay the VAT refunds and made part payment. In 2018, after the dealer’s attorney demanded payment, the BIR agreed to pay the balance of refunds due and interest, but asked for time, since it was waiting for an allocation from the Treasury to settle the amounts owed.

Eventually, the claim said, the BIR paid the balance of the refunds owed, more than six months after they became due and payable, but initially refused to pay the interest.

In 2020, there were more discussions between the dealer’s attorney and the BIR before the board agreed to pay.

In 2019, the Government settled approximately $3.5 billion of the $6.2 billion VAT refunds owed to businesses and the Finance Minister committed in the 2020 budget to a VAT bond issue of $3 billion to meet arrears.

In May 2021, the minister said approximately 98 per cent of refunds to small businesses had been paid.

However, the TT Chamber, in a statement, said feedback from its members at the time indicated that a large number of refunds were still outstanding and the amounts continued to increase.

“Additionally, the interest due by law was not paid and once again businesses are reporting that the payment of refunds is not being kept current. The VAT Act states that refunds due from government which are not paid within six months will attract interest of one per cent per month. While the covid19 pandemic has taken the country to a very different place, the economic situation is no reason not to abide by the law and honour the commitments made,” the Chamber said in its statement.