VAT Corner

The inner workings of HMRC are rarely of interest to outsiders but sometimes it can be useful to have some insight to enable a bit of forward planning.

Some time ago HMRC announced that some of its smaller offices were likely to be closed in favour of larger regional centres. As part of that process HMRC is redistributing

some functions to other parts of the country. In the long run this may be a positive development but in the short term it is creating delays which, in some cases, can be as long as six months. In relation to VAT we are currently seeing lengthy delays in the following teams:

Error correction team

This team processes the error notification forms used to declare errors made on VAT returns and can either lead to additional VAT payable to HMRC or to the receipt of a refund. This team has a backlog of at least three months, which may be good news if you owe money but not so good if you’re waiting for a refund.

Written enquiries and clearances team

This team has a three to four month backlog, so if you need a written opinion from HMRC on a VAT matter you’ll need to plan ahead.

Option to tax team – belated notifications and requests for copies of acknowledgements

This is the team to contact when you can’t find a copy of the acknowledgment of an option to tax. It’s currently operating with a backlog of four to six months. In our experience, acknowledgements of options to tax can be extremely difficult to locate as the option to tax may be many years old. For some of the earliest options to tax there may never have been an acknowledgment as these were not always issued by Customs & Excise.

It’s fairly common for the question of whether or not VAT should apply to a property transaction to be looked at when the exchange of contracts is imminent, so having to wait four to six months for HMRC to deal with a

request for a copy may well stall the transaction completely. So, even if you’re not contemplating selling one of your properties we recommend checking you have all of your acknowledgements of options to tax. Write to HMRC now for any that you can’t find.

Update on Making Tax Digital For VAT

The regulations have now been enacted and it has been confirmed that the start date will not be delayed, so affected businesses must be compliant from 1 April 2019. Affected business are VAT-registered businesses with turnover in excess of the VAT registration threshold. Businesses that are VAT-registered but have turnover below the registration threshold will be able to volunteer.

None of the accounting software currently available is fully compliant with the regulations as they are still being tested. We have been assured that compliant software will be available by the end of 2018 but it’s likely to mean that many businesses will be obliged to change to a compliant package partway through the financial year. This is not desirable but there appears to be little choice. If you need help or advice on making the transition to compliant software please speak to your usual contact at Shipleys or to the VAT team.

Current Issues

Tax update for landlords

In this article for Chestertons, Shipleys Tax Principal Mike Luckett gives a round-up of the latest tax changes which landlords should be alert to.

VAT News – Spring 2022

Our roundup of the latest VAT news includes early termination fees and compensation payments, end-customer claim refunds of wrongly charged VAT, plus revised guidance on VAT grouping registration

Businesses set to pay money laundering levy

Some regulated businesses now face paying an annual charge as part of the Government’s drive to combat international financial crime through newly introduced anti-money laundering levy regulations.