Late Registration for VAT

Late Registration for VAT

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I have client that should have been registered for vat from 2003. Can HMRC require the vat to be paid from that date? Are there any ways to reduce the liability?

Many thanks

Replies (12)

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By stratty
17th Dec 2014 16:52

No Limit

1.) Yes

2.) No

Client will be liable for some fairly serious penalties too I would anticipate.

Unfortunately the statute of limitations does not appear to be relevant for VAT.

 

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the sea otter
By memyself-eye
17th Dec 2014 19:00

Possibly


2003? 14 years ago...bankruptcy is an option.

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Replying to carnmores:
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By duncanedwards
17th Dec 2014 23:46

11 years?

memyself-eye wrote:


2003? 14 years ago...

11 years ago?

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By tracymair
17th Dec 2014 22:45

thank you, it's an incorporated charity. Would have the money to pay but would be devastating to the reserves they have. I don't think they see winding up the company as an option. 

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By tracymair
18th Dec 2014 09:31

Because it's going back so far I'm not 100% certain. However, there was a management charge to another group company which I think should have been vatable and also there were charges for diagnostic testing. From July 2009 these are exempt as the educational psychologists became registered but prior to July 2009 I think they should be standard rated (notice 701/57). This is main issue. The other income is exempt.

The accounts were audited. I'm not sure who by - I need to look out the old accounts. Would the auditors bear some of the liability?

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By tracymair
18th Dec 2014 11:47

thank you for that. Unfortunately there's no group accountant. I think I'll go down the route of contacting the previous auditors. Many thanks for your time & help it's very much appreciated

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By Malcolm McFarlin
18th Dec 2014 13:09

Penalties

I have seen another case where HMRC were prepared to negotiate the penalties. Your client could be liable to penalties under two different tax criteria but HMRC have been known to waive the penalty element.

Be careful with VAT on management charges if the transaction was over 4 years ago since HMRC may not allow the corresponding input tax. You may be better setting out the various issues and see if HMRC will compromise with regard to some of the VAT arrears.

Malcolm McFarlin

www.mandrtaxadvisers.com

 

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By DMGbus
18th Dec 2014 13:41

Management charges can be outside the scope of VAT and therefore not counted towards turnover for VAT registration purposes.

The specific circumstances that I have in mind are management charges in respect of common directors of two entities.

 

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chips_at_mattersey
By Les Howard
18th Dec 2014 15:35

Back-dated VAT

HMRC use a concession known as 'liable, not liable.' This means that, if the charity was not registrable for part of the 11 year period, HMRC leave it out of the reckoning for their calculations. This will reduce the VAT liability and any penalty.

If some VAT should have been charged to a related company which could recover input tax, you may be able to mitigate the cost slightly by issuing a VAT-only invoice.

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By G Grahame
19th Dec 2014 16:09

VAT only invoice

Theoretically, if an organisation should have been registered for the past 11 years and their only customer would accept a VAT only invoice, can just one invoice be issued to cover the 11 year period, so that the customer can claim it all back and payover the whole amount of VAT to the orgainsation, thereby ensuring that the organisation is not out of pocket?

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By Malcolm McFarlin
20th Dec 2014 17:22

VAT only invoice

In answer to G Grahame's comment 

'Theoretically, if an organisation should have been registered for the past 11 years and their only customer would accept a VAT only invoice, can just one invoice be issued to cover the 11 year period, so that the customer can claim it all back and payover the whole amount of VAT to the orgainsation, thereby ensuring that the organisation is not out of pocket'

What about the time of supply rules?-

VAT becomes due on a supply of goods or services at the time of supply. I'm not sure you could go back 11 years and issue a VAT only invoice. How do you account for different VAT rates on a VAT only invoice? I think the 4 year cap may apply.

I would welcome any other thoughts on this topic

 

 

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Replying to Pukka:
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By G Grahame
24th Dec 2014 08:17

Thanks - I thought that would be the case, but wanted to be certain. Much appreciated.

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