VAT

VAT

Didn't find your answer?

My client who I've known for three years, has received a letter from HRMC dated 24th May 2010 (apparently they sent one dated Feb 2010 as well) stating she should have registered from VAT earlier than what she did and are now demanding VAT from 2003 -2005.

They have done an assessment based on VAT returns from Dec 2005 - Sep 2006:- they took the average of output and imput vat for the four quarters, divided it by 12 x 27 months as figure owing prior to Dec 2005.

This has come as a shock to my client as she was not expecting this.

Client also maintains, this is the first she knew of them chasing her for the period 2003 - 2005 - I've personally not seen any letters regarding this.

Can anyone please suggest what we can do about this?

Prior to 2005, when she became a Ltd Co, registered for VAT, she was only working as self employed building up the business. 

Thank you for any comments.

Replies (4)

Please login or register to join the discussion.

By petersaxton
17th Jun 2010 20:11

First

The obvious thing is to find out whether the company should have been registered for VAT.

Thanks (0)
avatar
By mbuffery
18th Jun 2010 08:02

Check the facts and take expert advice

Depending on the facts, it is quite possible that HMRC are out of time to make an assessment for VAT going back that far.  You need to find out exactly what your client was doing at the time and get copies of ALL correspondence sent by (and to) HMRC.  Then consult a specialist VAT consultant.  I am happy to help if you don't have a regular contact to use.

Good luck

Mark Buffery

 

Thanks (0)
avatar
By DMGbus
18th Jun 2010 08:56

Pre-registration input tax

To mitigate the assessed VAT make sure that VAT incurred pre-registration is correctly given credit for, eg. stock and fixed assets on hand at "new" registration date  (3 years go back) and services (6 months go back).

It is probably worthwhile finding out how the original registration date was arrived at by the client / their advisor at the time.

Annual accounts for the relevant years will be useful as a guide to turnover levels, stock and capital expenditure pre-registration.

 

Thanks (0)
avatar
By PennyC
18th Jun 2010 09:43

20 years

I understand that the 20-year time limit applies to VAT lost as a result of failure to register when required to do so. But as noted above, specialist VAT advice should be sought in cases like this - whilst responses on AWeb may give you some comfort (or not) it is no substitute for obtaining proper professional advice.

Thanks (0)