VAT

If you submit a return late, HMRC could take longer to process it in the future, meaning an estimated debt will be held on file for longer. What does this mean for your business?

Many refund claims submitted to HMRC for past errors have been delayed by more than six months but it’s promised to improve the backlog. What does this mean for your business?

The case. Maxxim Residential Design Ltd (M) submitted a repayment return for the period ending 6/2014, which was reviewed by HMRC before repayment was made. The officer cross-checked two purchase invoices received from different suppliers back to the suppliers where input tax of £2,961 and £2,765 had been claimed. He discovered that both the narrative and amounts on the invoices had been changed by the director and that the suppliers had only charged VAT of £50 and £80 respectively on the invoices. The officer learned this information on 4 August 2014. On 28 October 2015 an assessment was issued to cancel all input tax claimed on returns for periods March 2013 to June 2014 on the basis that “false invoices” had been processed in these periods, i.e. not just in June 2014. ...

Q. Our business has suffered cash-flow problems in the last two years and we often paid our VAT returns late, incurring default surcharge penalties of 10% in some periods. We will not be able to fully pay the tax due on our next return on time. Will our past record mean a higher penalty? ...

One of your employees has admitted to banking sales into their own account. The VAT from these sales has not been included on your returns. How do you correct the problem and what will HMRC do about penalties?

The case. Colm Malone (M) was the sole director and 100% shareholder of Maloney Diner Ltd which traded as a cafe serving meals and drinks. After extensive work checking till rolls and carrying out invigilation exercises, HMRC issued an assessment to the company for underpaid output tax between 2015 and 2019 plus a VAT penalty notice for £45,508 on the basis that the inaccuracies were caused by the deliberate and concealed behaviour of the director. The penalty was wholly charged to M when a personal liability notice (PLN) was issued in November 2019. ...