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Denial of VAT Flat Rate Scheme discount

Denial of VAT Flat Rate Scheme discount

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Trader has registered for VAT and applied for Flat Rate Scheme with effect from EDR. Trader went over threshold in Jan 09 so EDR is 1 Mar 09. Application was late, but FRS was accepted by HMRC wef EDR.

However, a telephone call from HMRC to this office pronounced that the 1% discount was not available because of the late notification.

I can't find reference to this in VAT733, nor can I untangle SI 1995/2518 reg 55JB which, apparently, is the legal basis for the discount and would I assume contain the basis for denial.

Anyone come across this, and is it actually valid for HMRC to deny this discount?

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By rkillington
07th Aug 2009 07:13

Doesn't seem right
My reading of the Regs suggests that HMRC can deny the discount where the application for registration is more than a year after the applicant's effective date of registration. In this case you indicate that the EDR is 1 March 2009, so HMRC's denial doesn't appear to be supported by the Regs.

Have you received notification of this in writing? If not I'd suggest it's not worth the paper on which it was written.

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By nkwayne
07th Aug 2009 13:57

Pretty much the conclusion I had come to as well.


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