How can I get backdated for Flat Rate VAT?

I no longer trade on eBay or elsewhere so how do I get a VAT number to pay the Flat Rate VAT due?

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I applied for Flat Rate VAT before I knew I couldn't get a VAT number as I don't trade anymore and HMRC asked for three things in a followup letter a few weeks later which I received yesterday:

  • Estimated value of taxable supplies I will make in next 12 months
  • Annual turnover figures from VAT start date to now (what do I give HMRC, just numbers or printout from eBay / PayPal?)
  • Invoices for stock or from Accountant for services. Basically proof I'm still in business

Flat rate VAT would be much better for me and far less of a headache. I still have my eBay business account so I can restart sales for a while just to get a VAT number. Should I do this?

Replies (11)

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Scalloway Castle
By scalloway
18th Aug 2018 23:41

This is the answer I gave you on UK Business Forums. It was not challenged by any of the accountants there so I assume it must have merit.

HMRC will only want the total for turnover for the years you were over the VAT limit, they will not be interested in any detail at this stage.

You are not entitled to be VAT registered now as you are not making VATable supplies. I would write to HMRC and ask how they can deal with the situation. rather that try to get registered.

HM Revenue and Customs -
Alexander House
21 Victoria Avenue
Southend-On-Sea
SS99 1BD
United Kingdom

Thanks (1)
RLI
By lionofludesch
19th Aug 2018 10:31

If you haven't submitted any returns (and the facts are far from clear), you can use FRS, no problem.

If you've already submitted returns using standard accounting, you can't use FRS for those returns.

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By tonycourt
19th Aug 2018 11:59

I'm unclear about facts, but my assumptions are:
1. you charged your customers VAT while not registered (which is unlawful and may be illegal - I'm not sure which) although it was not your intention to defraud your customers or HMRC,
2. You intended to register but ceased trading before you could do so
3. You now want to register to account for the VAT you collected in error
4. You applied to HMRC to use the FRS but without having first applied to be registered.

You don't say whether or not you were required to register or whether you wanted to register voluntarily. The difference might be important if my assumptions are correct.

It's possible for you to register for VAT retrospectively even though you are not currently making taxable supplies. In fact if you were required to be registered you have no choice as HMRC can and will register you retrospectively if they conclude that you ought to have been.

As far as the FRS is concerned, HMRC will allow retrospective application in limited circumstances see https://www.gov.uk/hmrc-internal-manuals/vat-flat-rate-scheme/frs3300

Without more information my only suggestion is to so as already suggested; write to HMRC and explain exactly what happened.

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By pft51
19th Aug 2018 17:49

I haven't submitted any returns yet.

When I applied to be VAT registered online, there was also a tick box I could tick if I wanted to be put on the Flat Rate scheme so I ticked the box as my turnover was low enough for the scheme.

I am registering voluntarily for VAT. I was not requested to do this by HMRC or eBay.

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Replying to pft51:
RLI
By lionofludesch
19th Aug 2018 22:38

pft51 wrote:

I haven't submitted any returns yet.

When I applied to be VAT registered online, there was also a tick box I could tick if I wanted to be put on the Flat Rate scheme so I ticked the box as my turnover was low enough for the scheme.

I am registering voluntarily for VAT. I was not requested to do this by HMRC or eBay.

If your turnover exceeded the threshold, you're not registering voluntarily.

Thanks (1)
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By SXGuy
19th Aug 2018 21:38

But had you already charged vat? Yes or no?

I'm confused. You say your no longer trading but had applied for vat registration and now you want to keep it because you still have a ebay business account.
Keep it for what exactly? You just said your no longer trading?

Did you charge vat before being registered? If the answer is no, then I'm at a complete loss as to why you wish to continue with the registration.

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By pft51
19th Aug 2018 22:22

I wasn't asked by eBay to register for VAT or to display a VAT number. I just carried on selling as before when I exceeded the VAT turnover threshold. I didn't specify a VAT rate when I created my eBay listings.

The only thing I was required to do to list more items and increase my selling limits was to convert my eBay account to a business account.

My turnover did exceed £83,000 in a 12 month period which is why I think I need to register for VAT retrospectively.

The bottom line is I am not currently trading and if I need to pay VAT arrears then I would like to do so on the Flat Rate scheme as it would make the accounts much simpler and I can pay it off ASAP.

So, do I need to register for VAT to pay off the arrears owed?

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Replying to pft51:
RLI
By lionofludesch
20th Aug 2018 09:30

Just because you crossed the Rubicon at some point doesn't mean you had to register for your entire eBay career.

First, you need to establish the date from which you were obliged to register.

And if this was merely a temporary blip you may not have to register at all.

Seek professional advice. Could save you thousands.

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By John R
20th Aug 2018 10:44

If you were required to register from, say, 1 January 2018 and have ceased trading on, say, 31 July 2018, HMRC will register you from 1 January and deregister you on 31 July 2018. I attempted to apply for flat rate for a client in similar circumstances and HMRC refused on the basis that the flat rate scheme is only available to those who are registered for VAT at the time the flat rate application is considered by HMRC. You may therefore need to mention this to your accountant, who will probably therefore suggest that you do not cease trading (yet).

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Replying to John R:
RLI
By lionofludesch
20th Aug 2018 10:57

Interesting - my experience is the opposite.

A client came to me having submitted her final accounts with a turnover over the threshold (she only traded for just over a year). HMRC picked it up and the officer had pointed her in the direction of the FRS.

Even after penalties, this cost HMRC money but, no doubt, the officer was on some sort of performance craic.

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Replying to John R:
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By pft51
20th Aug 2018 18:13

John R wrote:

If you were required to register from, say, 1 January 2018 and have ceased trading on, say, 31 July 2018, HMRC will register you from 1 January and deregister you on 31 July 2018. I attempted to apply for flat rate for a client in similar circumstances and HMRC refused on the basis that the flat rate scheme is only available to those who are registered for VAT at the time the flat rate application is considered by HMRC. You may therefore need to mention this to your accountant, who will probably therefore suggest that you do not cease trading (yet).

This is what I was suggesting in my original post, not ceasing trading due to what HMRC wrote in their registration reply to me.

This is the route I am going to take as I don't want to risk being denied the Flat Rate scheme.

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