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VAT Late Registration Liable No Longer Liable

Whilst preparing a client's accounts for y/e 31 March 2015 it showed his turnover exceeded the VAT Registration.

On deeper investigation, and after asking for figures year to date, he actually went over the 12-month rolling threshold in October 2014 and dropped below the deregistration limit in October 2015.

HMRC were notified and they have dealt with this as a Liable No Longer Liable case.

They have calculated Output Tax as 1/6 of turnover and input tax as 15% of output tax. I was only ever asked by them to supply monthly turnover figures.

Has anyone come across such an instance before as I am curious why HMRC have treated input tax in this way and not asked for his actual expenses.

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26th Feb 2016 07:35

Hi

I had a similar case to this.

VAT was worked out by HMRC using method above to be £13k. They however neglected to notice the fact that business was selling used cars on second-hand margin scheme therefore not liable to VAT on t/o but on profit margin. Proprietor had also purchased a £20k truck in the VAT period.

Actual VAT after much to & fro-in agreed at around £2k :)

So if I were you I'd check inputs and outputs for VAT, unless there's 100's of transactions it should be easy enough to do returns.

Regards

Chris

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26th Feb 2016 08:06

Slightly different

We had a similar case although not identical. 

Client went over threshold, picked up when prepared stat accounts.

When we wrote to the vat office we were able to agree with HMRC that it was an exceptional year and that trading would continue below the threshold in the coming years.

It was then agreed that no vat would be due at all on this basis!

Sounds like we actually got a decent result for once.

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26th Feb 2016 12:26

Wish I had had that response! My client last year attended extra trade shows as an experiment which tipped him over the limit. Bottom line profit didn't increase though, so he is not bothering anymore with the extra shows. I did explain all this but to no avail,

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.

If you think your client is at a disadvantage based on the estimates made by HMRC, break out the spreadsheet and supply the actual inputs.

They are just trying to close the matter and are not too worried about the pennies. 

 

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