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Where Taxpayers and Advisers Meet

VAT Input tax from tax period more than 4 years ago

CaptA
Posts: 4
Joined: Wed Jun 26, 2019 7:06 pm

VAT Input tax from tax period more than 4 years ago

Postby CaptA » Thu Jan 16, 2020 8:21 pm

Hi,
I'm an expat living in the US and have a US based business that sells on Amazon UK. I've been selling on there for a while now, and in 2012 the threshold for VAT no longer applied to non-UK based businesses. When this happened i didn't know about it because why would I? It was a change to something i was already participating in and until someone tells you otherwise you assume all is the same.

Well, i got a notification from Amazon that VAT registration was required to sell on their platform and i registered. This turned out to be several months after the law had passed and as a result several months of VAT went unreported.

This was all picked up on a recent online compliance check. The period in question is more than 4 years ago. HMRC gave me a calculation of the VAT owed, and when i submitted my input tax they stated:
Upon checking the document you provided the input tax has not been factored in as a period of 4 years has elapsed since the end of the prescribed accounting period for which the return was made under regulation 34(1A) these input tax claims would be disregarded.

It seems a little unreasonable that HMRC can pursue VAT for a period but not allow me to claim the input tax for that same period. Are they correct in their assessment or is there something in the regulations that allows me to claim the input tax for that period?

Thanks

CaptA
Posts: 4
Joined: Wed Jun 26, 2019 7:06 pm

Re: VAT Input tax from tax period more than 4 years ago

Postby CaptA » Thu Jan 16, 2020 8:25 pm

Oh, and i did have one thought. I put it to the person dealing with my case and they never addressed it.

I'm on the FRS, and had thought about submitting a backdated application for the period in question so that i would only have to pay the FRS amount on the sales. Anyone think this will fly? They do say you can request a backdated period and its up to them if they grant it.

CaptA
Posts: 4
Joined: Wed Jun 26, 2019 7:06 pm

Re: VAT Input tax from tax period more than 4 years ago

Postby CaptA » Thu Jan 16, 2020 8:26 pm

Sorry, i don't know how to edit posts, by "They" i meant the dept that handles FRS applications.

les35
Posts: 578
Joined: Wed Aug 06, 2008 3:09 pm

Re: VAT Input tax from tax period more than 4 years ago

Postby les35 » Fri Jan 17, 2020 11:05 am

I would not expect HMRC to back-date an application for the FRS. You can always ask, though, especially since your input tax claim have been disallowed.
(VAT is not always fair!)

robbob
Posts: 2964
Joined: Wed Aug 06, 2008 4:01 pm

Re: VAT Input tax from tax period more than 4 years ago

Postby robbob » Sat Jan 18, 2020 10:04 am

les35
I would not expect HMRC to back-date an application for the FRS.
HMRC are much less likely to agree to a backdated flat rate registration where the vat returns have been submitted, i would be slightly more optimistic IF the vat returns for the period in question have not been submitted - hopefgully figures have also not been confirmed either (see below)

the Holy Cow! (Batman!*) tribunal decision illustrates the technical point albeit it went the wrong way for the blessed Cow.

25. On 10 November 2017, HMRC accepted the Company into the FRS with effect from 1 July 2017. However, HMRC refused to backdate to 1 January 2017, because the Company had
already filed its VAT returns for the 03/17 and 06/17 quarters. HMRC’s decision letter quoted the following passage from FRS3300:“The policy is to refuse retrospection where the business has already calculated its VAT liability for the period(s) using a different accounting method…The
reason for this is that the FRS exists to simplify VAT accounting and record keeping for small businesses, so that they are able to spend less time on VAT.

Further guidance in this regard is available here - note flat rate scheme did not exist till 25th April 2002!!
https://www.gov.uk/hmrc-internal-manuals/vat-flat-rate-scheme/frs3300



* the term Batman is tradmarked and is added here for dramatic effect only.

robbob
Posts: 2964
Joined: Wed Aug 06, 2008 4:01 pm

Re: VAT Input tax from tax period more than 4 years ago

Postby robbob » Sat Jan 18, 2020 10:13 am

One other point here - not my area of speciality exactly here (out of time stuff) but the normal limit for assessing careless errors for vat is only four years - if this is a careless error only - which very much sound like it is the case if you had checked the rules and knew you didn't have to account for vat and got caught out by a later change of rules - there doesn't seem to be any deliberate action to not pay vat.

Perhaps others more experienced may comment in that regard.

Note i would thoroughly expect hmrc to chance their arm and bill you for vat they have no right to bill you for.

Note you very well may take the viewpoint here that the right and proper thing to do is pay the taxes you owe. If the flat rate refusal doesn't get you back to an equitable position then perhaps this route might if its as i think and it's not too late for you to simply say to hmrc thanks for your letter but its too late.

davebrownvat
Posts: 58
Joined: Mon Jul 20, 2009 4:37 pm

Re: VAT Input tax from tax period more than 4 years ago

Postby davebrownvat » Thu Feb 13, 2020 12:50 pm

I might be missing something here, but the four year cap applies equally to VAT on both income and expenditure. Just for once, HMRC can't have it both ways.


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