Has anyone had experience contacting HMRC VAT to give them advance notice of fundamental VAT mistakes? I'm working on a contract and and there are a lot of errors that cannot be hidden.
I want to advise the company to speak to HMRC VAT before submitting the return and asking for their help in rectifying what has been done incorrectly?
I'm aware that this means HMRC VAT will probably continue to check the company for a long time but I don't see any other option as the mistakes cannot be disguised.
The mistakes came about because inexperienced people were handling the situation.
Thanks, Margaret
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Unless I'm misreading the OP's question. If you haven't yet filed the VAT return correct the fundamental errors and submit a correct return.
Problem solved
Agree
Correct the errors
HMRC are not consultants. All they would do is to explain how to make corrections
only 1 return was submitted for period to 31 Mar 21 before the company started selling product. There is a lot of inter-company stuff that hasn't been through through and precedents now set
Are you saying there are error in previously returned VAT returns rather than the one you are working on? If so you need to work through this
If the errors are in an unsubmitted VAT return just correct it before you send it.
only 1 return was submitted for period to 31 Mar 21 before the company started selling product. There is a lot of inter-company stuff that hasn't been thought through and precedents now set .e Shipping from the European parent to the UK subsidiary rather than the manufacturerIntercompany agreements and TP rates need to be drawn up. Most companies take a few years to work out and decide on Intercompany agreements and TP.
"The mistakes came about because inexperienced people were handling the situation."
MTD will put a stop to all this.
How? Why?
If inexperienced people make MTD submissions there can still be errors and omissions in them.
How? Why?
If inexperienced people make MTD submissions there can still be errors and omissions in them.
It's a basic tenet of MTD that errors are impossible.
Everyone knows that.
MTD particularly good at second hand schemes, retail schemes and best at partial exemption because it just knows the annual sort out off by heart
Firstly, I'm not exactly sure what you are asking.
Was VAT overpaid or underpaid on a previously *filed* return (box 5)? Is this value more than £10K. If yes, VAT 652 is required. If no, the correction is made on the next return (which in your case is likely to be 0621).
Are the errors on returns that have not yet been filed (assumed to be those for 0621 and 0921)? If "yes", there is no 'error' but those returns need filing and surcharges may apply to the 0621 return.
Are the errors 'something else'? Are they 'purely statistical' (boxes 6 - 9)? Are the errors 'purely R/C errors' (where Box 1 and 4 are wrong but net off to zero)? Are the errors due to box 1 entries being in box 4 (or vice versa)? Are there other issues?
All of the above will affect any answers given.
Incidentally, the most concerning part to me is when you say "errors that cannot be hidden", or "mistakes cannot be disguised". Neither of these should be in your toolkit. Whether HMRC notice, or act on, blatant errors in submissions is a whole different ball game!
Thanks. It's the future submission i'm referring to. It is overdue. The initial return for 3 months was fine. I understand how to correct for simple errors made on a prior return. My question is too complicated for here.
Thanks. It's the future submission i'm referring to. It is overdue. The initial return for 3 months was fine. I understand how to correct for simple errors made on a prior return. My question is too complicated for here.
Can you clarify your problem ?
You say that your question is too complicated for here. Apart from the obvious, "why are you posting then?", as far as I'm aware, you just need to work out what should've been paid, take away what was paid and stick the difference on the next return. Or, if it's too big, on a form 652.
"I want to advise the company to speak to HMRC VAT before submitting the return and asking for their help in rectifying what has been done incorrectly"
If you replace the words 'HMRC VAT' with 'an accountant' ... then you have the correct way forward.
Not being rude, but your posts over the last couple of days suggest that you're obviously working hard but are floundering on some accounting procedures.
Whether your company only requires some one-off forensic corrections and guidance, or would benefit from the ongoing appointment of an accountant, it sounds like this is the right course of action ... and rather quickly before you encounter/uncover further problems.
Agree, an accountant needed
So far either there are 2 seperate groups of companies or 1 international conglomeration with a UK group as subsidiaries.
And employees being given a supernew bit of sports kit
Op suggests employees are not capable of getting the VAT sorted
@OP get advice now and get the transactions properly understood
A subsidiary that cannot pay its telephone bill is underfunded
Thanks. A European parent with 1 UK subsidiary. The phone bill was just an example not a real scenario to make the point. The parent needing to pay subsidiary bill wasn't due to a funds shortage. Yes, I'm going to have to get some advice.
No offence taken. I mainly understand the issues I'm unearthing but have some technical gaps so yes will be speaking to an accountant before final submission. And I know what I don't know! This not a simple Vat return exercise.
No offence taken. I mainly understand the issues I'm unearthing but have some technical gaps so yes will be speaking to an accountant before final submission. And I know what I don't know! This not a simple Vat return exercise.
No offence taken. I mainly understand the issues I'm unearthing but have some technical gaps so yes will be speaking to an accountant before final submission. And I know what I don't know! This not a simple Vat return exercise.
You could write to HMRC, general enquiries team, and explain you have identified a number of errors that need correcting but will require some time to fix, say 2 months, and that you will write again to confirm the quantum of the errors.
All this does is stop HMRC hitting the client with a 'prompted' penalty (...if you think HMRC will query the return before you have time to fix it, then write to HMRC), but if you think you can fix everything before HMRC may get wind, then don't write to HMRC and sort out the errors fast.
Either way, you're going to have to notify HMRC of the errors eventually, unless VAT errors are less than £10k in value.
As others have stated, HMRC are not consultants, you have to work out the problems and fix them and then present your workings to HMRC, if outside of your comfort zone, get someone else who can deal with this.
Hi Jason,
Fantastic advice as always. However, from previous responses, it would appear there are no errors in previously *filed* returns and the returns (that contain errors) are yet to be filed. I think that's the general gist.
Would this change your advice regarding "reaching out to HMRC" (before the OP does just that)?
@OP... As I believe you have previously said there are no errors in filed returns, I fail to understand why you would notify HMRC of errors. Are you planning on filing returns that you know to be error-ridden? If not, what is there to notify?
Hi Jason,
Fantastic advice as always. However, from previous responses, it would appear there are no errors in previously *filed* returns and the returns (that contain errors) are yet to be filed. I think that's the general gist.
Ah - the scales are falling from my eyes.
Thanks for deciphering.
If the errors are in the current return and the return has not yet been filed, then fix the errors first and then file.
If not enough time to fix the errors, then file the return but run the risk of knowingly filing an incorrect return, which comes with a substantial penalty, so in that scenario, write to HMRC, tell them you are fixing things, file the return as is/unfixed, then fix for next quarter...this is then an 'unprompted' disclosure, much harder for HMRC to assess a penalty.
Thanks Jason, I believe they have been notified about the delay, not the errors. I'd rather be upfront about the errors and correcting entries as they will be obvious and as the refund will be high HMRC would probably query regardless. So the plan I think is going to be to put through correcting entries for all the incorrect stuff that has happened, explain why it happened in the first place, and explain why it won't happen again. And then expect regular VAT audits for a while! I don't want to go into too much more detail here suffice to say I'll be speaking to an accountant with expertise on intercompany arrangements before submitting to HMRC.
Thanks Jason, I believe they have been notified about the delay, not the errors. I'd rather be upfront about the errors and correcting entries as they will be obvious and as the refund will be high HMRC would probably query regardless. So the plan I think is going to be to put through correcting entries for all the incorrect stuff that has happened, explain why it happened in the first place, and explain why it won't happen again. And then expect regular VAT audits for a while! I don't want to go into too much more detail here suffice to say I'll be speaking to an accountant with expertise on intercompany arrangements before submitting to HMRC. The main purpose of the post was to find out how "reasonable" HMRC are when confronted with bad mistakes that have been caused by lack of expertise.
Thanks Jason, I believe they have been notified about the delay, not the errors. I'd rather be upfront about the errors and correcting entries as they will be obvious and as the refund will be high HMRC would probably query regardless. So the plan I think is going to be to put through correcting entries for all the incorrect stuff that has happened, explain why it happened in the first place, and explain why it won't happen again. And then expect regular VAT audits for a while! I don't want to go into too much more detail here suffice to say I'll be speaking to an accountant with expertise on intercompany arrangements before submitting to HMRC.
If the vat return(s) that have been submitted are correct there are no errors to highlight to hmrc - you are in danger of way overcomplicating the solution here.
If the errors are all in periods that have not been submitted simply correct as appropriate (or best you can after taking suitable competent advise) before submitting and then wait for hmrc to get in contact technically if younhave done this "there are no errors" as what you have submitted is correct- you have nil reason to liase with HMRC imho to point out the vagaries of specific in period adjustments that exist on a return that has not been submitted but end up with the correct totals. HMRC don't pre approve vat returns they simply expect you to submit and they then may ask questions once submitted - if its a mess presentationaly wise or ref meeting the "MTD test" i would worry didly squat about that as long as you are happy that what has been submitted is "the best of a bad job"
To me HMRC should only come into play if you have specific technical questionsand reference specific transactions and that should be independent of the process of submitting the vat return.
In summary i think you are massively over complicating a simple process of submitting the best you can and are presumably seeking a comfort blanket that does not and should not exist.
Totally agree, if there are no errors in the one submission made then everything else 'simply' needs to be sorted in order that your submission of the next two quarters contain correct figures in correct boxes ... and ASAP.
My only additional 'advice' is that it would be a good idea to keep a formal note of the problems you've uncovered (in the books not submissions) and each action that you take to resolve these. This may be useful in the event of HMRC raising any queries, but will undoubtedly help you (and your colleagues) in avoiding any repetition of similar errors in the future.
Are the errors in accounting for VAT on intercompany transactions?
And you are rectifying this and the paper trail needs correcting but not the VAT returns?
I would spend time correcting it instead of spending time on here or contacting HMRC. You are correct that a large VAT repayment in the first return will likely give rise to queries but if you have the paperwork then it shouldn’t be an issue and is all done by email.
There are no penalties for the late submission of a repayment return.
Never, ever contact HMRC unless legally obliged to do so.
Yes, intercompany. And, most of my time has been spent working on it not in here!! I've pretty much got to the bottom of it today.