How to Reclaim Overpaid Tax for Your Business

/1st July 2025/inBusiness, Running a business, Tax

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How to Reclaim Overpaid Tax for Your Business

Overpaying tax isn’t uncommon for UK businesses, especially when dealing with complex tax systems or rapid business changes. The good news? In many cases, you can reclaim what you’ve overpaid, but only if you know where to look and how to act.

In this guide, we’ll explore how UK businesses can identify and reclaim overpaid tax across corporation tax, VAT, PAYE, and other common areas. We’ll also explain how to prevent overpayments in the future.

Common Types of Overpaid Business Tax

Several types of business tax are prone to overpayments. These include:

1. Corporation Tax

Overpayments may occur if your company:

  • Submits incorrect figures on the Company Tax Return (CT600)
  • Overestimates profits or doesn’t deduct all allowable expenses
  • Pays an instalment too early or over the required amount

You can reclaim corporation tax through an amended tax return or by contacting HMRC directly.

More on reclaiming corporation tax – GOV.UK

2. VAT (Value Added Tax)

VAT overpayments are common due to:

  • Incorrectly treating exempt items as standard-rated
  • Reclaiming less input VAT than allowed
  • Miscalculations in your VAT return

If you’ve submitted a VAT return and later realise it was wrong, you can adjust it in your next return (if under the threshold) or write to HMRC for larger corrections.

Correcting VAT errors – GOV.UK

3. PAYE and National Insurance

PAYE overpayments can happen if:

  • You submit duplicate payroll data to HMRC
  • You pay for staff that left or were never onboarded
  • Employment Allowance wasn’t applied correctly

You can reclaim PAYE overpayments via your payroll software or using HMRC’s Employer Payment Summary (EPS).

Claim a PAYE refund – GOV.UK

4. CIS (Construction Industry Scheme)

For contractors and subcontractors in construction, deductions made through CIS can sometimes be excessive or duplicated. If you’re a limited company subcontractor, you may reclaim CIS deductions via your corporation tax return or through a separate claim process with HMRC.

Reclaiming CIS deductions – GOV.UK

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How to Reclaim Overpaid Tax from HMRC

The process varies depending on the type of tax, but generally follows these steps:

Step 1: Identify the Overpayment

Review your:

  • Submitted returns
  • Payment records
  • Communications from HMRC

Use your accountant or accounting software to help reconcile the amounts due versus what was actually paid.

Step 2: Make a Claim or Correction

Corporation Tax

  • Amend your CT600 return within 12 months of the filing deadline
  • Or write to HMRC if the overpayment is clear but outside the amendment window

VAT

  • Use a VAT652 form or correct the next return if the error is under £10,000 (or less than 1% of turnover)

PAYE

  • Submit an EPS or contact HMRC for manual reclaim

Step 3: Wait for Confirmation

HMRC typically processes tax reclaims within:

  • 6 weeks for corporation tax refunds
  • 30 days for VAT adjustments
  • Up to 8 weeks for PAYE reclaims

Keep a copy of all submissions, proof of payment, and HMRC correspondence in case of delay.

How Far Back Can You Claim?

There are strict time limits for reclaiming overpaid business tax:

  • Corporation tax – 4 years from the end of the relevant accounting period
  • VAT – 4 years from the end of the accounting period in which the error was made
  • PAYE/NICs – Usually up to 6 years

Missing these deadlines could result in lost refunds, so it’s important to act promptly.

Can HMRC Refuse a Refund?

Yes, if:

  • The overpayment cannot be evidenced with accurate records
  • The claim is made outside the permitted time limits
  • The overpayment arose due to fraud or misrepresentation

To reduce the risk of refusal, ensure your records are clear, accurate, and submitted through the appropriate HMRC channels.

How to Avoid Overpaying Business Tax in the Future

While mistakes happen, you can reduce the risk of overpayments by:

  • Using cloud accounting software like FreeAgent or Xero to track tax obligations in real time
  • Conducting quarterly tax reviews with your accountant
  • Double-checking VAT codes and payroll entries before submitting returns
  • Keeping accurate digital records to meet Making Tax Digital (MTD) compliance
  • Planning ahead for allowable expenses, capital allowances, and reliefs

At Accounting Wise, we support UK small businesses with proactive tax planning, helping you stay compliant while avoiding unnecessary tax liabilities.

Summary: Reclaiming Overpaid Tax

Tax Type Reclaim Method Time Limit
Corporation Tax Amend CT600 / contact HMRC 4 years
VAT Correct return or use VAT652 4 years
PAYE/NICs Submit EPS or contact HMRC Up to 6 years
CIS Submit reclaim via CT600 or online Varies by role

Need Help Reclaiming Overpaid Business Tax?

Reclaiming tax from HMRC can be time-consuming and complex, especially if you’re managing multiple tax types. At Accounting Wise, we help small businesses identify and recover overpaid corporation tax, VAT, PAYE, and more.

We’ll handle the process, liaise with HMRC, and ensure you receive what you’re entitled to without the stress.

Need help reclaiming overpaid tax? Contact Accounting Wise today for expert support and maximise your refunds.

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