VAT registration response

VAT registration response

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A client has received a response from the VAT registration unit after I applied for them to be registered. They ignored the 64-8 and agent authorisation but that is an issue that has been addressed elsewhere. My concern is that they have instructed the client to start accounting for VAT from the requested registration date and add VAT into the price but not show it separately. If I had known that they would place great store in the requested date when they cannot registered companies promptly, I would have (legitimately) used a later date. But the real concern is that they want my client to charge VAT from that date when the customer cannot reclaim it until the registration is complete and this could, from recent experience, take months. I tend to think that this is contrary to the regulations.

Incidentally a call to the telephone number given in the letter just rang with no answer

Replies (7)

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By apacarada
28th Jan 2011 13:00

It seems to be the norm

 

The same happened when I applied for VAT on behalf of two clients. I advised them to ignore the instructions as the main rule is that you cannot charge VAT unless you are registered. HMRC didn’t give advice how to deal with the situation in case they refuse the application.  Arber Pacarada

 

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By spidersong
28th Jan 2011 13:58

Ignore the advice...

.....so long as the client's happy to lose 16.66% of turnover.

If you've requested a specific Effective Date of Registration then that's the date HMRC will use, what did you expect, you ask for a date and they pick a random one of whatever they feel like?

The client will be registered and required to account for VAT from the date you/they requested so they can if they like decide not to increase their prices until some future date, but that's not going to stop HMRC legitimately going after them for VAT for the period between the EDR and when they actually get around to pricing properly.

Basically they've told the client that if they don't want to make a loss they should increase their prices but not show it as VAT on the invoice because they're not allowed to until the VAT registration numbers confirmed, because HMRC will be taking that VAT off them. You've told the client "you'll be registered from xx and so you'll be paying 16.66% of your takings to HMRC from that date, so I suggest you keep prices the same for a few extra weeks just to make sure registration has that extra sting!"

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By Euan MacLennan
28th Jan 2011 14:00

Eh?

"If I had known that they would place great store in the requested date when they cannot registered companies promptly, I would have (legitimately) used a later date."

Did you really expect them to register your client from a date other than the one you requested?  If they made a habit of doing that, we would all be screaming at them.  VAT registration usually takes about 4 weeks, unless you are in one of the trades where (carousel) fraud is prevalent.  If you could have legitimately used a later date, why on earth did you not do so and apply at least a month in advance?

The HMRC advice is their standard guidance.  They suggest that you add VAT to your prices (so that you do not lose out), but not disclose it on your invoices as such until you have a VAT registration number to quote.  At that point, you are supposed to re-issue proper VAT invoices.  The not entirely legal, but practical alternatives are:

carry on as before, without adding VAT, and when the registration comes through, issue VAT-only invoices to all your customers and hope they pay them.add VAT and show it as such, but without quoting a VAT registration number - most customers will never notice.  If a customer (or a VAT inspector at a customer) does spot it, hopefully it will not be until you have the number, when you can give it to them (and apologise for the oversight!).

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By beverly chester
28th Jan 2011 14:21

Registration Date

 I always request a specific date so that the client knows where they stand and have NEVER received anything other than that date.  I recently requested a voluntary registration backdated to commencement date (8 months) and got it without question. Client only dealt with VAT registered companies so no problems there.

I do, as the previous post suggests, ask my clients to quote a VAT inclusive rate (it must not be shown separately) and simply get them to annotate the invoice with the words "VAT registration pending" and tell them to advise their client that they will reissue a proper VAT invoice, supply a copy of the registration certificate of refund the VAT element in the very unusual event that registration would be refused. 

I am not aware of anyone I gave that advice to having any problems although on occasion a particularly street wise customer may pay the net amount agreed at the time and only pay the VAT when the registration comes through. No problems there.

In the past when we used to have an occasional visit from the VAT man (we always insist client inspections are done at our office if we do the books) I have, n occasion, had cause to draw their attention to this method and they don't seem to have had a problem with it at all.

What has happened to VAT visits we have not seen hide nor hare of them for at least 8 years!

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By wblewis
28th Jan 2011 15:29

VAT work-arounds.

 Thank you for your replies. My original post derived from frustration with the VAT registration process now in place, I have been waiting 6 months for VAT registration for one company without explanation. Of course the unit in Wolverhampton does not correspond with me.

As something of a cynic the common theme from HMRC and the answers seems to be to work around the problem, which of course we will do. But is this the way to operate an efficient tax system?

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By JasonLVC
28th Jan 2011 16:25

VAT Registration delays

The 64-8 authority does not mean HMRC will only correspond with you.  The 64-8 gives HMRC the authority to disclose and correspond with you as well as the taxpayer.

I do regular VAT registrations online and they turn around within 10 days or less.  Where I've had slightly longer delays it has involved opting to tax property or questions over ownership of property.  

You shouldn't be waiting 6 months for a VAT registration unless it is for a business in a high-risk fraud sector like mobile phones or unless the taxpayer has 'previous' with HMRC in terms of debts. 

recent statistics published by the JVCC (http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_PROD1_029370#P16_2559) show that 70% of applications are processed in 13 days or less. 

Delays are usually down to incomplete or erroneous applications, wrong VAt1 form being used or delays responding to HMRC's queries.

 

 

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By wblewis
28th Jan 2011 17:07

Vat registration statistics

I beg to differ - having check the link there is a difference between targets and achievments.  

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