VAT flat rate scheme guidance changed

I am a tax consultant... using 12% rate and HMRC signed it off in a letter.

I wrote to HMRC on 29/06/16 [letter sent by recorded delivery] to change my FRS to 12% but I am yet to receive a reply. How long did it take for you to receive your reply Echo 761?

Well... therein lies a story... It was last year and it took some time to get a reply but the reply ran to about 3 or 4 pages long and I was accused of using the FRS as part of some sort of VAT avoidance scheme (jeesoh!) and I also had "wickipedia" quoted to me as a source of the reasoning that HMRC would not backdate my claim to a change to the 12% from an earlier date. But i have had a letter with HMRC on another matter since February 2016... they signed for it then and it has been sitting in their system since then and been overlooked. They recently wrote asking for a reply.. which I had sent in February and they found when I called them. I am afraid you are in the position of "throw a six to start" in terms of how long it will take HMRC to reply, but good luck. There is always the e-mail system to chase it at; https://online.hmrc.gov.uk/shortforms/form/VATGenEnq?dept-name=&sub-dept...
good luck with that too, they replied to say a letter was in the post referring to my original letter..... nope it was a chaser from HMRC as above. It makes me laugh... better than crying I guess.

Thanks Echo 761 for your humorous reply. I'll get a box of tissues for HMRC. They don't quite lose out of course since it increases your profits on which you pay CT or SA tax.

I had a client who registered themselves incorrectly and when I asked HMRC to change it they did but only from the start of the next month. They used the phrase that "you picked the incorrect rate" so therefore it's your fault so they won't repay.

Interesting question. The HMRC guidance states you must notify them within 30 days if you wish to change your FRS% which implies that it can't be done retrospectively. However, this did not prevent HMRC issuing backdated assessments for incorrect choice of FRS% although, as this article states, the Tribunal did not support HMRC with regard to some of the appeals against the HMRC FRS decisions/assessments. Maybe it was one rule for HMRC and one for businesses with regard to applying for the FRS% to be changed retrospectively!

HMRC recently went on a crusade against the FRS and issued assessments like they were going out of fashion. They even set up a "task force". A lot of people paid the assessments as they were effectively "bullied" into it by HMRC. They did not have insurance in place and the cost of fighting it was not cost effective against the amount assessed or the uncertainty of winning their case. This was a shocking tactic and the view of most of the tribunal cases supported this view that HMRC were... having a laff! But yes unlikely to get them to agree repaying you where you chose the wrong rate, completely unfair treatment though when you consider the same basis was used for their assessments.