Serving over 2 Million visitors each year

Search
Free Accounts Software for All Small Businesses
You can now download TAS Basics for FREE. It’s the complete working program and there’s no charge, no obligation and no time limit. Get it now!

VAT Registration delays causing chaos

print  e-mail 

Delays in routine registrations for VAT are getting worse and are now typically taking three or four months, up from two months last year, and around two weeks a few years ago, says VAT experts. Delays of up to six months are common when anti-fraud checks are carried out as part of the clampdown on carousel fraud.

According to chartered accountants, UHY Hacker Young, it seems to take 30 days or more for registrations sent by post to even be opened by HMRC, and correspondence sent to them in support of applications is often lost, further complicating and delaying the registration process.

Businesses waiting for a VAT registration number can face severe restrictions on their capacity to trade. For example, small businesses without a VAT number may not be able to get invoices paid, or property deals can fall through because the law requires for some types of property deal that the buyer is VAT registered and sellers are understandably unhappy about proceeding before HMRC have processed the paperwork.

Simon Newark, VAT Partner told Bytestart today that the registration process, which used to cost just a few hundred pounds per business, now frequently costs between £1,000 and £2,000 in time costs simply because of the delays. Whereas previously, new clients could expect to wait a couple of weeks to be VAT registered - they can now expect to wait 3 to 4 months.

Mr Neward said: “The situation just keeps getting worse. These delays are causing serious problems for businesses trying to abide by the rules, but if HMRC’s own poor management and inefficiencies are to blame, why should taxpayers bear the cost?”

“The clampdown on carousel fraud is a major cause of the problem, but carousel fraud is not about to go away, so HMRC needs to address long term management and staffing issues if the situation is ever going to improve.”

He adds: “The delay in VAT registrations and interminable checks on legitimate VAT repayments are causing serious cashflow problems, and many businesses have folded as a consequence.”

HMRC recently admitted that the situation will continue to deteriorate due to an additional 20,000 applications for VAT received from newly incorporated businesses as a result of the managed service companies legislation introduced in the Finance Bill 2007.

Rather shockingly HMRC has asked companies making VAT registrations not to bother phoning to check the progress as this may delay the application even further. Simon Newark says this is just adding salt to the wound.

He explains: “We need to constantly check they have got the paperwork, check they have received the supporting documents, check it is allocated to a case-worker, check the case-worker has understood the circumstances, endeavour to pre-empt the issuing of pointless requests for further information, it just goes on and on. The real irritation is that we do not want to do this, but have to in order to make sure that our client’s affairs are being dealt with properly and efficiently. Things sit in in-trays or get lost too often for us to take the risk.”

On top of this, Newry VAT registration office is closing due to cutbacks, which HMRC acknowledges will further exacerbate delays.

Simon Newark says: “The Complaints Unit is so inundated that it takes a month for them just to acknowledge a formal complaint and it is unable to give any indication of when the complaint will be dealt with. Laughably, HMRC’s official policy is now that VAT registration delays are no longer a complainable matter since all taxpayers are being equally disadvantaged and no-one can complain they are being unfairly treated!”

Posted July 5, 2007

Latest articles in Value Added Tax
 
Overcome the January 2011 VAT hike by planning in advance
Here are some tops tips on how small business owners can get the most out of the VAT rate change in January 2011, if they plan in advance. [July 28, 2010]
 
VAT rate change to 20% - how "artificial" transactions are treated
VAT expert, and Bytestart contributor, Les Howard, outlines the anti-forestalling legislation which will apply when the standard rate of VAT rises from 17.5% to 20% in January 2011. [July 22, 2010]
 
Thousands of claims could follow Man United VAT ruling
Manchester United's landmark VAT case could open the floodgates for thousands of claims from businesses across the UK, according to tax experts. [June 17, 2010]
 
Flat Rate VAT Scheme - first year bonus for newly registered businesses
As an incentive to new VAT registered businesses to consider using the Flat Rate Scheme, HMRC allow a 1% reduction in the flat rate percentage for your type of business for one year. This can be a significant benefit for newly registered traders. [June 11, 2010]
 
VAT Registration - When should I register?
When should you register your business for VAT, why you might want to voluntarily register, and where to find out more about the registration process. [April 5, 2010]
 
VAT returns for many businesses must be submitted online from April 2010
HMRC are reminding small business owners that VAT returns will soon have to be submitted online from April 2010 if you have a turnover of £100,000 or more, and for all new VAT registrants from 1st April 2010. [February 10, 2010]
 
Changes to European Union VAT system from 1st January 2010
Small businesses in the UK may not yet be aware of a number of important changes to the European Union VAT system which took effect from January 1, 2010. [January 25, 2010]
 
Accounting for the 1st January 2010 VAT change
If your VAT quarterly returns end on 31st January or 29th February 2010, they will include VAT collected and paid at both 15% and 17.5%. Readers who are on the cash accounting or Flat Rate VAT scheme are urged to take care when working out their VAT liabilities. [January 18, 2010]
 
Was the VAT rise a waste of time for small businesses?
A recent survey has revealed that 79% of businesses saw a huge increase in business administration as a result of the VAT rate changes in 2009, while over a third (36%) said that the rate rise had actually incurred costs and driven down profit margins. [December 21, 2009]
 
Small businesses urged to prepare now for January 1st 2009 VAT change
With the VAT rate returning to 17.5% on January 1st 2010, businesses are being warned to begin preparations for the change now or face disruption in the New Year. However, it appears that only one third of companies are likely to have prepared for the change in advance. [December 3, 2009]
 
Tips to successfully handle the VAT rate change in Jan 2010
On 1st January 2010, small businesses will have to switch back to the traditional 17.5% VAT rate, following 13 months at 15%. To quickly adjust to this change, Intuit has provided Bytestart readers with some helpful VAT tips [November 12, 2009]
 
VAT registration delays - new firms "fighting for survival"
Start-up businesses are struggling to set up and expand because of delays of between three and five months waiting for VAT numbers, according to a leading accountancy group. HMRC is supposed to complete most VAT registrations within two weeks. [October 1, 2009]
 
Checking to see if a VAT registration number is valid
How to check that a VAT registration number you have been given is valid. This could help protect you, should your business become innocently involved in a chain of fraudulent transactions such as carousel fraud. [August 10, 2009]
 
VAT - Value Added Tax Guide
A summary of Value Added Tax for small businesses. When you should register for VAT, what the registration threshold means, how you repay VAT to HMRC, and links to further information. [May 18, 2009]
 
Detailed guide to the new VAT penalty regime from April 2009
April 2009 marks the introduction of a new VAT penalty regime. This article provides an in-depth guide to how the penalties will work. [March 31, 2009]
 



Click Here





Our Partners
Key Services
Key Services
Useful Guides
Click Here

© Bytestart Limited 2005-2010 - All Rights Reserved | Terms of Use | Site List | Website Feeds | Rss Feed RSS Feed

Business Insurance, Business Bank Accounts, Public Liability Insurance, Professional Indemnity, Startups, Limited Company, Sole Trader