A client de-registered for VAT. Some six months later we discovered an overclaim of input VAT whilst preparing the accounts. As the VAT registration no longer existed I telephoned the VAT helpline to find out how best to deal with it. I was advised that my client should write to HMRC accounting adjustments team in Liverpool explaining what had happened and send payment of the amount to HMRC. We wrote on our clients behalf and enclosed the clients cheque for the amount due - stapled to the letter and with the clients previous VAT registration number on the back. The letter very clearly set out why we were sending the cheque, what the amount due related to, the VAT period it referred back to and the date on which the registration had been cancelled.
Great - job done - except..... today (almost one year later!) my client received a letter from HMRC DMB Banking saying there is a credit to his VAT account (equal to the amount paid over in respect of the overclaimed input tax), and what does he want to do with it! Their suggestions include "I have made an error on a previous return and the remittance is to correct my liability" (yes we have already told them that!), but then goes on to ask for it to be corrected on the next VAT return (!!) if under the prescribed limits (which it was). Obviously we cannot do that as the registration scheme has been closed. Is this bureaucracy gone mad or do they not train anyone at HMRC to do joined up thinking anymore? Does anyone there ever read letters? I dread to think how much time this one is going to take to sort out.
Rant over - thanks for listening!
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