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how to get VAT payment correctly allocated?

we have paid Q1/20 delayed VAT but HMRC don't allocate the payment to the debt

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In March 2020 we cancelled our VAT direct debit mandate, as recommended, due to the uncertainty over Coronavirus.  Therefore Q1/20 VAT was not collected by HMRC.  The Direct Debit mandate has subsequently been reinstated.    In January 2021 I decided the time had come to pay the Q1 VAT and I set up a HMRC direct debit payment accordingly.  On subsequent checking I found that HMRC had allocated the payment against Q4/20 return, only claiming the balance due for that quarter by direct debit and leaving Q1/20 outstanding.  So in March'21 I made a BACS payment to our VAT account for the outstanding Q1/20 VAT.  This is now showing on the account as an unallocated payment (dated 15th March), leaving the Q1/20 balance showing as an overdue debt.  I presume that when we submit Q1/21 they will use the payment against that.  Unlike with PAYE there appears to be no way of communicating to HMRC what VAT period is being paid - or have I overlooked it somewhere?

I have tried to contact HMRC to get this allocated correctly.  The web site actively discourages phone calls (and I have no desire to spend a day hanging on the phone waiting listening to their hold music), web chat is permanently busy and I don't have time to sit here all day refreshing the page in the hope that someone will become available.  In January and earlier this month I have used the online VAT enquiry submission form to raise this question but no reply has been forthcoming.  I have submitted another query today but am not hopeful of a response (HMRC says aloow 15 days LOL).

Has anyone here any experience of getting VAT payments correctly allocated?   Is my only option to wait until they decide to chase me for payment and charge me penalties?

Replies (16)

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By Duggimon
23rd Mar 2021 13:42

If they charge you any interest or penalties they will be rescinded once they sort the mess out.

Your options are either to keep trying the phone (8:00 am is the time to call) or write them a letter and wait for them to fix it, just make sure you detail the dates and amounts relevant and someone will eventually fix it.

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Replying to Duggimon:
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By mushroom_dept
23rd Mar 2021 14:56

Ah, haha, write an actual letter. Why didn't I think of that, actual old school paper :-) I think I'll see what happens with the Q1/21 return then I'll give it a go, thanks.

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By Matrix
23rd Mar 2021 14:13

If they reduce the Q1 21 DD by the Q1 20 deferred VAT most of us are paying this week then this won’t just be a problem for you, it will be a huge issue across the board.

I would probably wait and see how much they take in the next DD.

Even if you call, if they don’t have a box to tick on their programme then it won’t be resolved. They sent a cheque for a client, we called, got it cancelled and advised they wanted to leave the credit as they don’t have a UK bank account, they have now reissued the cheque.

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Replying to Matrix:
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By mushroom_dept
23rd Mar 2021 14:58

Thanks, yes, I'll see what happens with Q1 and then follow up with the suggestion of writing a letter.

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By tom123
23rd Mar 2021 14:45

For pure amusement, I thought I would check our account on HMRC.

I recently paid my Q1 2020 balance in full.

Sure as eggs are eggs, my account shows, on two separate screens, an overdue payment for XX,000, and also a payment on account for XX,000.

Wonder if they will ever manage to join these two up?

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By mushroom_dept
23rd Mar 2021 14:58

Glad it's not just me!

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Replying to tom123:
By turchyna582
25th Mar 2021 10:02

I had experience last year with the allocation issue - but in respect of the CT liability for 2019/20 . HMRC were chasing this, notwithstanding that it had been paid and well before the payment deadline.
The Government Gateway showed an outstanding liability in one year, and an unallocated payment in the previous year. Even a first year student should have realised that they need offsetting - or at the very least 'looking into'; rather than getting Debt Management involved!

Sadly, AI and bank-feeds etc., seem to be treated as the default method and are assumed to be absolutely correct. It may be a 'generational issue' but, as a 'baby boomer'; I still value logic, sound arithmetical skills and application of embedded knowledge (rather than 'googled' answers), above modern IT!

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Replying to turchyna582:
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By mushroom_dept
25th Mar 2021 11:27

Indeed - I think there needs to be some artificial intuitiveness programmed in as well as the 'intelligence'.

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By garystirling
23rd Mar 2021 22:30

You can actually make the reference refer to a certain period like you can with PAYE, you put the month and year like mm/yy after the VAT No. eg QE 31st March 2020 - 1234567890320

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Replying to garystirling:
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By mushroom_dept
24th Mar 2021 10:40

Ah, that's interesting thank you.

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Replying to garystirling:
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By tom123
24th Mar 2021 10:53

Interesting! I actually asked (on here) before making the payment - but the concensus was that doing anything other than VAT No could cause the payment to get lost :)

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Replying to tom123:
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By mushroom_dept
24th Mar 2021 12:35

Which is what I would have expected too. I guess the answer is that if just the VAT number is stated the computer can pick that out and route the payment to the correct account but if anything else is quoted it requires manual intervention. Manual intervention increases the risk of mis-application but might mean that it gets allocated correctly.

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By The_hobbit
25th Mar 2021 09:45

I had an error from the move to MTD. The payment at the change over wasn't taken. When I noticed I paid it to HMRC. They then deducted this amount from the next quarter so I rang and was told to pay it again, which I did. They then deducted this from the next two quarters.
I tried twice, well before Covid, and have ignored it since!
This is an old problem

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Replying to The_hobbit:
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By mushroom_dept
25th Mar 2021 09:58

Ah, so in your case even getting manual intervention didn't resolve it. It will be interesting to see what happens with all the other deferred payments as mentioned by Matrix in an earlier comment.

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By evamckearney
25th Mar 2021 10:18

I emailed HMC about this same issue at the end of October 2020 and received a reply in January 2021 which said "There is nothing to worry about in relation to this. The systems update will be reversed on 31 March 2021 at the end of the deferral period and the payments made allocated to the relevant period - 03/20."
I will check in April that this has indeed happened.

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Replying to evamckearney:
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By mushroom_dept
25th Mar 2021 11:28

Ah, great that you got a response from HMRC. I await April with interest in that case.

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