Re: HMRC and a voluntary but late VAT registration. The subsequent changes to ‘potential’ VAT registration dates and time taken by HMRC is leaving this client feeling like he is going 'insane' - here’s why:
On 4th October 2012 HMRC were advised (by letter) that client had gone over the VAT threshold during Feb2012. (He is a builder who set up in 2010 and did not have accounts prepared up to that point in time- he's been PAYE all his working life and this is all new.) At that time it was genuinely thought to have been a one-off and an exception was requested.
On 29th October 2012 the VAT registration service sent a questionnaire. By 'collating' actuals for the new year (thus far) and preparing estimates it was clear that this was no exception.
On 25 November 2012, questionnaire was sent to HMRC Vat by email stating that client would send in the VAT1 form for registration.
On 26th November VAT1 (reg form) was completed and a date of 18.11.2012 was requested for VAT registration.
On 27th November 2012, a letter was received from the VAT registration service enclosing a VAT1 form, requesting that this be completed and sent in. This letter said the date of registration was 1st September 2011. Letter also said if client does not agree with this somebody else at same office can review.
5th December, 2012 this (second) VAT 1 form was sent to HMRC (as instructed in the 27.11.12 letter) this time the date of registration was left blank as the client did not want to accept the date of 1st September 2011. Some notes were annotated on the VAT1 form.
18th December 2012 a call was made to HMRC asking for a VAT registration number and it was mentioned the client was ‘in a state of limbo’ as they now know that they have to be registered for VAT but had not vat number and business didn’t stop because HMRC had not issued the VAT number. What should the client do with the current billing to his clients?
HMRC said they will only register (issue a vat number) if client accepts it will be registration from 1.9.2011. This felt like being pushed into a corner. During another call, HMRC asked for the appeal to be put in writing. By this time the client is ‘frantic’ with worry and was conveyed to HMRC whom didn’t seem to bat an eyelid. I put to HMRC that this may deter people from voluntarily registering if they know this is the way things are handled.
20th December 2012 an appeal against the registration date of 1st September 2011 was sent to HMRC asking for leniency. At the same time the flat rate vat scheme form was completed.
It was pointed out that the client had been ‘up front’, volunteered information and maintained effective and swift contact as soon as things were discovered. It was also pointed out that to make this young business work the client had to work excessively long hours to find work, competitively quote and re-quote for work as well as undertake the work, also that previously he had been PAYE with no knowledge of this. It was pointed out the stress that this process was causing him and it was a genuine mistake that this had happened. It was also pointed out that the future of his business was uncertain especially as his customers were domestic and there was no way of asking them for any back-vat.
Further calls made to ask for the VAT registration number.
22nd December 2012 letter (dated 20th) received from HMRC stating the case has been passed to Local compliance and appeals team.
On 24th December a fax was received from HMRC - after jumping through further hoops to have the VAT number released - stating:
a) The VAT registration number
b) Confirmed VAT registration date was effective from 1st April 2012.
31st January had a call from client to say letter dated 30th January 2013 from HMRC sent to him (only) and states that the exception has been refused.
4th February rang HMRC who said Vat registration was from September 2011.
It was pointed out that the fax received from HMRC 24.12.12 said April 2012 was the registration date I asked for clarification. HMRC asked for a copy of this fax (from 24.12.12) and referred to a mix up.
4th February, copy of the application for flat rate VAT scheme (sent in December) was also re-sent to HMRC.
Letter dated 1st February 2012 received from HMRC (Grimsby) by client. HMRC quote the VAT act, threaten of a possible fine for failing to notify and request net vat turnover from 1st April 2012 to 3rd December 2012 within 30 days.
As stated, my client is now quote ‘going insane’. As well as the very high degree of confusion amongst the various VAT departments, the instruction to complete a second VAT form, the ‘gun to the head’ approach before releasing a VAT number, the different registration dates and a request for more information without any closure - this is now over 4 months old. My client even rang HMRC Grimsby in December to pay start to pay off this debt this is definitively unquantifiable debt - he’s worried sick. He was told they could not identify him without a VAT number.
To make matters worse, with the whole HMRC experience, the cheques paid for back-tax (self-assessment) were lost in the HMRC system. The cheques were both cashed and the client had to ring his bank several times to ask for copies of the cheque. The reason for this was because HMRC had lost the cheques. Eventually HMRC found the cheques in their system. You can imagine the impression this client has of HMRC and the experiences he will no doubt share with others as his worry escalates over this four month period. Do they have any idea of this turmoil they cause but have the power to do this??
At this moment in time - some 4 months after the original notification and bills racking up the client still does not know:
- what date is the VAT registration date as there are more than one?
- Has he been ‘accepted onto the flat rate scheme for builders, if so from what date?!
Would be grateful if there is any leverage or similar anybody can offer to deal with HMRC - the client desperately wants closure on this. The client is exceptionally ‘concerned’ to say the least.
Thanks in advance.