VAT repayment due - how long?

VAT repayment due - how long?

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I submitted the first VAT return for a new business with high set up costs.  Therefore a significant repayment due.  Gov website says this takes 10 days.

Although my submission is shown, the balance on the account is incorrectly shown as zero.  Tried phoning but auto responses says these are taking 5 WEEKS to sort do not phone until after 14th Sept.

So I have no idea when I may receive the money. 

VAT Qtr end 31/7/15

Any advice?  Apart from Do not open a business in the UK!!

Replies (5)

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By DMGbus
25th Aug 2015 13:49

VAT return submission says...

" Repayments of VAT can take up to 30 days to process. Don't contact HMRC until 21 days after submitting your return. "

In practice if it is a first return with a very large repayment I have spoken to HMRC before the return submission and started the verification process early by a note being present on the client's file BEFORE any challenge takes place.  The most recent case involved a £61k VAT repayment.

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By lamsmore
25th Aug 2015 13:58

Spoke to them before hand. 

Spoke to them before hand.  Unfortunately there seems no way to add any notes to the VAT submission, which would be very helpful.

As in original comment, the Gov website says 10 days.

Also I am surprised (and concerned) that the VAT account shows zero balance.  Would this be some type of default setting until the submission has been reviewed?

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By The Innkeeper
25th Aug 2015 15:17

Years ago

Customs ,as it then was, had a policy of making a control visit on all first returns that had a refund in excess of £100. This was to stop 'first return fraud' I suspect that a similar policy is still in place but they may ( or may not) have changed the level at which compulsory inspection takes place.

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By dkbs
25th Aug 2015 16:32

It depends...

HI,

My recent experience of 5 clients is that the first return is questioned on 60% (i.e. 3) of these occasions. This questioning has been by phone and post and has required the sending of various documents to HMRC to prove the VAT claim and in one case, verification of the fact there was an intended trade (property development).

You can contact them to have a note put on the client VAT record at HMRC (you are correct, no notes can be added to the return itself) however, this is not a guarantee that you will avoid being selected by the computer to provide additional information (which takes little notice of the comments on file).

As for the time for you to receive the rebate, I have known days and I have known weeks. You should note that the 10 days and 30 days timescales are guideline and, as with all HMRC guidelines, you should take them with a pinch of salt (this does not apply to deadlines they impose on you however which must be delivered on or by a split second before the deadline to avoid penalties etc.). For new VAT registrations,  would be surprised to hear if anyone with a sizeable first repayment return had received the money within 10 days!

With regards to the balance showing on HMRC Online Ignore it. The VAT Online balance is temperamental and definitely does not report the information in real time. Assuming your return has been received by HMRC and you are confident of it's acceptance, you should take it that the figure will be as submitted.

Why is the above necessary? As alluded to by The Inkeeper, it is to avoid VAT fraud. After all, you client could register for VAT this month to claim a sizeable rebate and then Disappear off the radar entirely. After all, HMRC hasn't got the first idea of what the reclaim relates to or of your client's long term intentions are.

Finally, whilst UK VAT is not perfect and running a UK company is not easy... the accountancy profession, as with all professions is specialised and takes practice. Would your client be able to conduct his own hip replacement without specialist knowledge? Or maybe teach a class of 30 infant school kids without training. In running a company they should accept that there will be issues along the way. As for whether the grass is greener elsewhere? Have you tried dealing with US federal and state taxes? Or perhaps Spanish IVA?

Brgds

DK

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By Matrix
25th Aug 2015 18:58

You can request interest on any repayment which takes longer than 30 days I understand.

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