Q:
Hi
Hoping someone can give some VAT advice and how to deal with the HMRC.
This week I received a Demand for Immediate payment. Previous to this I had no communicationwhatsoever. Indeed the notice came in unbranded HMRC envelope, on flimsy HMRC paper. It did not say what the matter related to and had slip at the bottom (for cheque only payment). I have struggled to verify the phone number and when I called the main VAT number they were unable to verify the number I had on the notice but they did confirm the amount owing. So I have assumed this to be genuine
It transpires when I call the number that this relates to when I was self employed for a short period (as a managment consultant) working in a country outside the EU. I belived that because the place of supply was outsde the EU that VAT was not applicable and therefore did not register.
The HMRC (VAT area) had been contacting my old address with notices (despite the HMRC having my new address for self assesments). They had also assumed when calculating the amount that I had been self employed for a much longer period that I had actually been self employed (despite again this been clear from my self assesment records with the HMRC)
I have put the above in writing to the HMRC as they have requested. Although they have now said it will take “weeks” to respond. They also said I usually said that I normally have 30 days from the initial notice to appeal, which would be impossible as they were sending to my old address and I also should of informed the VAT unit of change of address. How could I inform someone who I had no previous contact with?
The question I have from the above is what steps I can now expect? How much would I be liable for? While I am (now) aware of my initial oversight in not registering when my turnover reached the threshold, I belive the mistakes since then have been with the HMRC, using the incorrect address, assuming I had been self employed for a much longer period etc etc. I am now living/resident in New Zealand which makes dealing with this worse (time differences/contacting the HMRC) and feeling like a big cloud (and large amount) hanging over my head.
Any advice greatfully received,
NK
A:
Hi NK
First of all I’d suggest that you don’t worry about it too much. It’s not even clear to me from your post whether or not the services you were providing were liable to UK VAT and if the VAT demand is based on their estimate from other information (eg your UK tax return) then it could be completely wrong.
Write to them to lodge a late appeal against teh assessment pending their review of your case. You don’t need to go into any detail with the appeal, all you need to do is to lodge an appeal in writing on the basis that the assessment is incorrect. I’d be surprised if they won’t accept the appeal even though more than 30 days have passed.
Strictly speaking you are supposed to pay the assessed VAT while they are considering the appeal but I assume that you don’t have any assets in the UK anyway so they can’t exactly chase you for the debt at the moment! The most important thing is to correspond with them and you’ve already started that process. Just make sure that you lodge a request for an appeal – just a letter, nothing special – as this has to be done in order to have the assessment formally withdrawn if they agree that the assessment is wrong.
Hope it all works out okay, but let me know if you need any more info.
Marie
Q:
Thanks for the reply Marie and putting my mind at rest. I must admit having an immediate demand from the HMRC for a large amount was slightly disconserting.
I am not sure how exactly the amount on the demand was calculated. I would assume it was from self assesment returns. I am fairly confident the place of supply was outside the EU, so zero rated. My error appears to be failing to register for VAT when my turnover went (very slightly) over the threshold.
Do you have any ideas what the penalties would be for failure to register or any idea on approximate timeframes of the appeal once I have written to them. I have spoken to the HMRC and they suggested that I would receive a letter ‘within weeks’ in response so fairly vague.
Thanks for your help, appreciated,
A:
Hi NK
I hope by now that you’ve heard from HMRC and that you don’t have any VAT to pay as it sounded as though your supplies were outside the scope of UK VAT. However, in the event that there is VAT to pay, HMRC can levy penalties of up to 15% of the underdeclared VAT – see section 3 of VAT Notice 700/41: Late Registration Penalty http://tinyurl.com/78zo632.
Even if HMRC levy a penalty you can appeal if you think you have a reasonable excuse, as explained in the notice. But I hope it doesn’t come to that!
Belated Happy New Year!
Marie