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Vat penalties on this ?

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A company is a repayment trader and was receiving quarterly repayments of c £5k per quarter.   It was party to a large sales transaction in qtr ended Dec 12 and was due to make a payment to HMRC of c£200k.  It didn't do this and indeed has not filed any returns since then and 16 returns are due to HMRC.  (There are some genuine reasons for this failure which I won't go into here , but the company accepts this is their doing and is prepared to accept the consequences and now wishes to come clean) 

The net position is that during the past 4 years their vat ledger now shows that they are in credit with HMRC of c40k.

Quite apart from the one qtr ended Dec 12, every return (albeit not submitted) has shown a repayment due from HMRC.  

For some reason HMRC have never corresponded with this company to request a return nor have they removed them as a registered business. 

What is the overall penalty situation ? 

Thank you.  

Replies (6)

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By petersaxton
22nd Jan 2017 11:12

HMRC would have been expecting to have to pay out more money so they weren't worried about not receiving the VAT returns.

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RLI
By lionofludesch
22nd Jan 2017 11:19

That's right. I have a repayment trader who's a bit tardy and he hardly ever receives an assessment.

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By bernard michael
22nd Jan 2017 11:29

It's better you approach them before they find out. Once they see that the £200k is owed to them they will assess your client for every return since and put heavy penalties on which you will then have to appeal.
Part of that appeal would have to be bring the returns up to date
So to be pedantic
As overall your client owes no vat for the period from 12/12 to date I can't see what stops them from preparing all the returns ASAP. It has to be in their best interest unless there are relevant facts you haven't told
us about

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By DMGbus
22nd Jan 2017 11:39

The correct way forward is to prepare the missing returns, and if the online filing system allows, file each and every missing return without delay.

Where any return shows a liability due to HMRC that is unpaid there are at the very least default surcharges potentially payable (but none for repayment returns), see guidance 700/50 re this:
https://www.gov.uk/government/publications/vat-notice-70050-default-surc...

You will see from the guidance that the first default carries no penalty.

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By blok
22nd Jan 2017 12:21

Thank you all. It was always the plan that we will now submit the 16 returns. 15 of which are late and 15 show repayment due.

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chips_at_mattersey
By Les Howard
23rd Jan 2017 10:10

There is a new Default Surcharge system (FA 2009 Sch 55) waiting to be implemented. A quick check will reveal your Client will be penalised in the future, so now is the time to introduce proper procedures to have Returns submitted whether Payment or Repayment.

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