The client

Our client registered for VAT a number of years ago, however, unfortunately due to issues with their book keeping system and a misunderstanding on how they should account for VAT no returns were filed. Instead, the client paid VAT on central assessments issued by HM Revenue & Customs. This led to a growing VAT liability that was identified when the client changed accountants,  with their new accountant asking The VAT People to act on behalf of the client.

Our approach

As such, if HMRC were to accept the client could use a flat-rate VAT scheme from the date of registration to correct the arrears in VAT, it would create a substantial reduction in their VAT exposure.

Although the client had not applied to use the flat-rate scheme when they registered for VAT, the fact they had omitted to file the returns meant there was a strong argument for them to be allowed retrospective permission to use the scheme.

A successful outcome

This action by The VAT People resulted in the VAT arrears owed by the client to HMRC being reduced from over £80,000 to £49,000, a saving of £31,000 in VAT for the client.