I have a client who was late registering for VAT (just short of two months). He has been hit with a late filing penalty under the new regime. HMRC have calculated the potential lost revenue at £1,925. I am happy with the dates and their assumptions about non deliberate and unprompted etc.
I have calculated the VAT for the period he was late and this comes to £1,750 for the penalty period, however, pre registration claims (VAT on stock, services etc) mean that even at the end of the first return period (3 months later) he is due a refund.
As I can find no clear guidance on this I was wondering what is people's experience was with this - am I appealing to zero or £1,750?
My feeling is that as he owed them nothing for the entire penalty period there is no potential lost revenue as they owed him.
What have others done - and had success with?