This blog is about VAT. Rather than trying to provide totally comprehensive explanations of complex VAT issues, this blog seeks to be thought-provoking on all things VAT!
HMRC chasing old debts
I guess many business people have a period trawl through old and doubtful debts. It is a useful 'housekeeping' practice, meaning that bad debts can be identified as such, but often payments can be collected. It seems to me that HMRC are doing just the same!
I have seen several of these recently. In one case, a Client received a payment back in 2004, which HMRC identified in 2007, and assessed as taxable. Correspondence followed, and HMRC agreed that the supply was exempt (ATM machine income). Yet, in May 2011, the Client received a reminder for the original sum, plus interest, of exactly the same amount! I have, of course, challenged this, and advised the Client accordingly.
In another case, the Client let matters develop, such that he now has a Statutory Demand for a VAT Return which was paid on time!
What also disturbs me is the emotional blackmail contained in the HMRC letter; "we are sure you will appreciate the link between businesses paying their taxes on time and the money needed to pay for essential services from which we all benefit."
I am hoping that taxpayer represetatives will raise this issue with the Department!