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Failure to VAT Deregister

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Joined: Wed Aug 06, 2008 3:56 pm

Postby Pat10 » Thu May 22, 2008 10:08 am

If someone has failed to notify HMRC that they have ceased trading and also to vat deregister, are there any penaties.
They should have completed the final vat return almost 1 year ago but want to get all vat paid now and submit final return. In fact they have 3 o/s returns. What is the correct procedure to follow now almost a year on.
Thanks for any advice

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Location: West Sussex

Postby pawncob » Thu May 22, 2008 2:10 pm

Haven't HMRC chased you for the o/s returns?
Anyway, just complete the returns and submit them. Depending on the position there may be a penalty to pay on the VAT.
There is no legal requirement to notify HMRC that you have ceased to trade other than completing the relevant boxes on your tax return.
With a pinch of salt take what I say, but don't exceed your RDA

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Postby spidersong » Fri May 23, 2008 1:10 am

Actually. If you've ceased to trade you shouldn't complete the outstanding returns but should notify HMRC who'll issue a final return up to the date of ceasation. (If there are full return periods outstanding prior to this date then these will need submission).

In terms of penalties: VAT Act 1994, Schedule 1, Para 11 gives a requirement to notify the end of liability/entitlement to register within 30 days of the entitlement ending (i.e. of ceasing to trade).

Section 69(1) of the VAT Act lays out the penalties that can be enforced if this isn't complied with and says that penalties start at £50 and for failure to notify can go as high £1500.

That being said I managed an HMRC VAT deregistration team for several years, and despite possibly hundreds of people that breached the 30 day limits we never once issued a 'breach of regulatory' provisions penalty, and I never heard of any other unit doing it. I think theoretically these provisions also relate to not notifying changes of address etc.

They are only used in very extreme cases such as where there may be an intent to defraud. So I wouldn't worry on this one (and to be honest I'm fairly certain that the majority of HMRC officers are not aware of these provisions anyway!)

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