Good afternoon all.
The problem we are having at the moment is we have a group company which had invoiced to its 4 sister companies back in May 2007. The VAT liability on all the invoices would have been at around £200k. Unfortunately (from what I have been told) a genuine mistake was made and the VAT was not included in the VAT returns. The VAT element was instead posted to a VAT suspense account and had been kept there since.
3 of the sister companies did not claim the VAt and posted the Input VAT to a VAT suspense account and this has been brought forward and carried forward in the accounts since.
On the other hand, the other company had claimed its £50 worth of input VAT and actually got the refund.
We now have a situation where one company owes £200k to HMRC and 3 other companies are owed £150k, giving us a net liability (from a Group Perspective) of £50K.
Now we know that all this happened more than 4 years ago and HMRC would not go back 4 years unless they can prove there was Dishonest Conduct and fines can be pretty hefty if they can prove that this is the case.
Could any one please advise as to how we should go about clearing this mess?
And would HMRC agree to settling of the net amount of £50k or will each company be assessed separately.
Thank you all.