Late VAT registration and then some

Late VAT registration and then some

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Client hadn't kept track of his sales and registered late for VAT. HMRC are in process of considering any mitigating circumstances before issuing a penalty based on sales made between when he should have registered (as disclosed on his application) and when he actually registered..

Subsequently, I have newly become involved and in analysing the sales it is clear that registration should have been some months earlier than was disclosed in the VAT application. It is my understanding that the effective date of registration can not be changed, so what's the best approach for settling this?

Thanks in advance for contributions. 

Replies (12)

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chips_at_mattersey
By Les Howard
26th Sep 2012 10:29

Date of registration

The date of registration can be changed in the circumstances you describe. You will need to write to HMRC explaining the circumstances, and providing an explanation as to why the incorrect date was notified previously.

By taking the initiative to tell HMRC, the liability to penalties will be reduced, or ought to be!

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By DavidMiller
26th Sep 2012 11:05

Change in EDR

Les is right that the EDR can be changed where the client should have been registered earlier and this should be notified to help reduce penalties. A couple of points on mitigating the penalty.

Firstly, HMRC should only impose any penalty on the net VAT liability i.e. output VAT less input VAT as this is the tax which is in error (officially know as Potential Lost Revenue or PLR).

Secondly, depending on the late registration has been handled, mitigation can be up to 100% although to secure full mitigation the late registration has to have been an 'unprompted disclosure' where in effect the client has made a full 'voluntary' disclosure and provided all material facts to HMRC completely unprompted.

 

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By andy.partridge
26th Sep 2012 11:44

Thanks Les

I thought that might be the case, but as there seems to be a specific form for everything these days I thought it best to ask.

Edit - Thanks David. I think actually FRS is the way to go with this one, taking advantage of the 1% discount too.

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By djbrown
26th Sep 2012 12:19

Might be wrong...

...but I don't think HMRC give the 1% discount in a late registration situation.

Dave

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Replying to JimLittle:
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By andy.partridge
26th Sep 2012 12:40

Thanks Dave

djbrown wrote:

...but I don't think HMRC give the 1% discount in a late registration situation.

Dave

Hmmm . . . .OK, something else to check out.

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By George Attazder
26th Sep 2012 16:20

This is a nice civilised thread...

... can I just sit here all day, hiding away from all the nutters arguing about the rights and wrongs of the money laundering regulations and what MPs get up to?

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By djbrown
27th Sep 2012 13:05

One other thing

Is there any possibilty of re-charging the VAT that will be payable, to customers?

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chips_at_mattersey
By Les Howard
28th Sep 2012 15:06

Late Registration

It does depend on the original contractual position. If the sales are B2B, it much easier to do so, if the customers can recover the VAT. But do try to use it as a PR exercise, rather than damage limitation; so write to the customers, referring to 'rapid growth' rather than imply poor administration, etc. Indicate that they should be able to reclaim the VAT charged. You don't want to damage the business by sending carelessly worded letters to customers, putting them off dealing with you again!

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By andy.partridge
28th Sep 2012 15:43

Thanks . . .

 . . . but the sales are not B2B.

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chips_at_mattersey
By Les Howard
29th Sep 2012 20:35

Late Registration

The problem with B2C sales is that the customers are unlikely to agree to pay an additional 20%, and would be difficult to enforce against them.

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By Ian Lawrence
01st Oct 2012 12:45

I just had this issue.  The

I just had this issue.  The client went back down below the threshold after 5 months.  After all the calculations had been done for the VAT liability,  I asked HMRC to consider exception to VAT registration and to my surprise they agreed.

 

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chips_at_mattersey
By Les Howard
01st Oct 2012 16:33

Late Registration - good result!

That is a good result, and quite rare in my experience!

Well Done!

 

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