HMRC gathers information about businesses from many different sources, which is processed through ‘Connect’, its data analysing tool. The results help HMRC understand more about a business than has been declared on tax returns.
This intelligent use of data has allowed HMRC to find businesses who are not VAT registered, when their turnover indicates they should be. HMRC has written to those businesses asking them to register for VAT or to tell HMRC why they don’t think the business has to be VAT registered.
If clients receives one of these letters they need to respond without delay as HMRC will follow the letter up with further tax enquires. We will not have received a copy of the letter as the tax agent, but HMRC does ask the business to show the letter to their accountant.
HMRC acknowledges that there have been significant processing delays for VAT registrations recently, part due it says, to errors in completing the VAT registration form. One way to avoid simple errors is to use the online registration tool, as this will check for omissions and boxes that don’t make sense as the form is completed.
Written by the Tax Advice Network