Complicated VAT position.....

**northernladuk** · 25 November 2013, 13:50

Surely if these issues were bad enough to stop you doing your VAT returns it would be bad enough to stop you working. How did you earn money if you were incapacitated?

Did they not sent you a host or really tulipty letters demanding payment?

The page below shows you the penalties...

HM Revenue & Customs: Penalties for mistakes and delays with your VAT

**malvolio** · 25 November 2013, 13:51

Given that being VAT registered carries a range of legal responsibilities, including making periodic returns, I think you may have a problem. First thing to do is to phone the VAT helpline - unlike the HMRC they are generally very helpful - and go from there. You may well cop for a late payment penalty.

As a rule of thumb, don't ever piss off the VAT man: they carry a big stick.

**NeedHelp** · 25 November 2013, 14:06

Thanks.

Can I not just pay back the VAT to the client and submit nil returns?

My taxable turnover doesn't cross the VAT threshold.

**SueEllen** · 25 November 2013, 14:12

If you screw up your VAT returns phone them up and confess as soon as you know. Don't give them bulltulip excuses just tell them the truth and ask how you can pay it.

**TheCyclingProgrammer** · 25 November 2013, 14:43

Any penalties will depend on the VAT owed to HMRC in each period that you failed to submit a VAT return.

The simplest scenario: you owed no VAT in those periods. Then you will not have any fine to pay *but* HMRC may have estimated your VAT return and based your fines off those estimated amounts, so you will need to speak to them.

If you did owe VAT and have been paying the quarterly VAT, but simply not submitted a return, then according to HMRC's information I don't think you will be liable to a fine/surcharge, but this will still be recorded as a default and extend your surcharge period.

Short answer: if you've paid everything you owe you probably won't have any fines to pay, but should get on the phone to the VAT helpline ASAP, explain your situation, get the missed VAT returns submitted and then if you have no reason to continue being registered for VAT, de-register yourself.

I sympathise with your issues but IMO that's no excuse for not having submitted these returns. If you were not in a position to carry out your responsibilities as a director you should have found somebody to delegate these duties to or let HMRC know up front.

**Scruff** · 25 November 2013, 14:52

Originally posted by NeedHelp View Post

Anticipating this, the company charged VAT to its single client for the period
Feb 12 - Jan 13), and received the VAT payment in Dec 13 for the Feb 12 - Dec 12 period.

Do you perhaps mean received in Dec 12?

Originally posted by NeedHelp View Post

In the period, Feb 12 - Jan 13, the company made 74k (profit chargeable to corp tax), below the VAT threshold.

VAT is not calculated on the "profit chargeable to corp tax" but on its Turnover

I would suggest that you engage the Professional Services of an Accountant, many of whom advertise and participate on this forum.

There are posters on this forum, who will try and exacerbate any mental health issues that you might have had...

**doodab** · 25 November 2013, 14:53

Originally posted by malvolio View Post

As a rule of thumb, don't ever piss off the VAT man: they carry a big pointy stick.

WHS.

Once you are registered the threshold for registration is irrelevant. If you are registered you have to charge VAT and pay it to HMRC. So sending nil returns isn't an option.

Also the threshold is based on turnover, not profit. So you may well be over it anyway.

**craig1** · 25 November 2013, 15:38

Originally posted by SueEllen View Post

If you screw up your VAT returns phone them up and confess as soon as you know. Don't give them bulltulip excuses just tell them the truth and ask how you can pay it.

That's it in a nutshell. The VAT people are probably the most helpful HMRC employees if you're open and honest with them but, as others have mentioned, they can be complete nightmares if they think you're lying. Here's the HMRC manual page for reducing VAT penalties.

Here's how I'd do it if I were you:
1. Build your case:
- Do your calculations, make a calculation on how much you owe in VAT.
- Get as much of the evidence for your non-payment issues as you can including any proof that you've kept the VAT money separate and immediately payable, i.e. you're not misusing the money.
- Do you have a doctor, psychiatrist or therapist who could provide a statement about your mental health? If so, this may help as you then may qualify for almost guaranteed help in the system as a disabled person under the Mental Health Act.

2. Call them up, be open and honest and offer to make the full payment immediately.

3. Expect the brown envelope telling you to get your paperwork ready for audit. Play along nicely and you may get away with just a statutory interest penalty. Hint strongly that your coverage under the Mental Health Act should be covered under the "Special Reductions" section of the penalties guide. Edit: If they think you're just playing them along, you're unable to pay the money or you can't prove anything about your mental health then you should expect a very meaty punitive penalty.

Also, your client won't appreciate you tried to give them back VAT money as you then increase their VAT liability as they'll have discounted it already in their VAT returns, probably discounted in already closed books for the year. If I were them I'd refuse any refund and tell you to go away and sort it with the tax man.

**kaiser78** · 25 November 2013, 17:03

The killer question to address as mentioned earlier, is how were you able to be working/trading if in such a mental state and yet not be able to submit your returns and also for such a long period ? Why could you have not got your accountant to submit the returns ?

Complicated VAT position.....