Good morning.
New client has come to me and whilst preparing their accounts it shows they exceeded the vat threshold last year. They only just went over (£86k) but then hovered around the £88k-£90k region, so no "blip". They thought turnover was as per the accounts, not rolling 12 months. In addition, they lost their mother last year and had twins(!) and it all got too much for them and they lost track.
They understand the need to register and have told me to do it the right way and they'll take a loan to pay the back VAT fines etc.
In the circumstances, would you just register as usual, putting correct dates etc and then wait for the penalty letter to come, then try to mitigate; or would you contact HMRC VAT separately in addition to the usual Registration for VAT online?
I've never had this before (such a late registration). Many thanks in advance.
Replies (9)
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I'd probably try to pre-empt it myself. Though I'm not sure if it works or simply draws attention.
What was the proper EDR ?
And are they retailers ? What's the chance of recovering the VAT from customers?
Are you 100% sure on your figures and no wiggle room with anything that is overstating the turnover?
What kind of business and what form?
Register the client from the correct date; issue VAT-only invoices to business customers if they can; explain the circumstances to mitigate any penalties.
When you do the registration, don't contact HMRC separately until they contact you - there is no guarantee they will match the VAT 1 with your letter!
I had a similar case a couple of years ago - a pub (of course) run by two ex firemen. They registered, apologised, paid the VAT arrears and explained they had now employed an accountant and would do things correctly in future.
Result?
No penalty.
Super thank you all. That's in line with what I thought thank you so much.
I’ve submitted several late registrations like this in the last few years and have been surprised to have received no penalties at all.
Bear in mind also that penalties are based on the tax not paid on time. Often times the initial VAT return will include a pre registration claim that makes the first return a refund. Do ensure that this first return is done properly and this claim made so that there can be no penalties for the first return.
I have recently registered a client who should have registered from 1 Feb 2019. HMRC issued a VAT cert stating the 1st return should cover period 1st Feb 2019 to 31 Jan 2020 and EDR as 1st Feb 2019. It is three monthly thereafter.
I called up HMRC to ask about penalties and was told that as long as the first return was submitted and paid by the usual due date of 7th March 2020 then no penalities would arise as the submission would be on time. No mention of late registration penalities. But i have told the client that HMRC will issue any late penalties if due after the 1st submission just in case.
They also told me to submit outside of MTD for this 1st return and then move the client on to MTD from 1st Feb 2020.
Well, that would be right, as the return period starts prior to 1st April 2019.