Following a change in HMRC's processes, UNW's specialist VAT team warn businesses of the consequences of submitting a late VAT return.
Where a VAT return is not submitted by the due date, HMRC has an automated process in place whereby a Central Assessment is issued, in effect as a prompt to submit the outstanding VAT return.
When the VAT return was subsequently filed, previously the Central Assessment was withdrawn automatically, and the return processed as normal.
However, with HMRC’s migration to a new platform, to deal with VAT through Making Tax Digital and linked with the new penalty/interest regime introduced for VAT from 1 January 2023, we have been made aware of a change in HMRC’s processes.
As before, where a VAT return has not been filed by the due date, HMRC continues to issue a Central Assessment. However, it is from this point that HMRC’s internal processes have been changed. When the outstanding return is filed, instead of it being processed automatically and the Central Assessment withdrawn, it now appears to need manual intervention from HMRC.
Recently, we have seen this process take over 100 days to flow through, while in the meantime businesses are being chased by debt collection agencies for payment of the Central Assessment. It is also adversely affecting the normal payment of VAT through direct debit, and resulting in HMRC issuing additional charges for interest and penalties despite the business thinking they are up to date.
Our advice to businesses is to try and ensure that VAT returns continue to be filed by the due date. Should a business not be in a position to pay its VAT liability by the due date, HMRC will discuss the possibilities of a payment plan, but the VAT return should still be filed by the due date if the consequential administrative havoc is to be avoided.
If you are having practical difficulties with submitting VAT returns through Making Tax Digital compatible software, please contact enquiries@unw.co.uk
If you would like more information about this, or any other VAT related matter, please contact one of UNW’s dedicated VAT specialists:
Mark Hetherington
VAT Partner
E: markhetherington@unw.co.uk
T: 07715 704 739
Ian Coulthard
VAT Senior Manager
E: iancoulthard@unw.co.uk
T: 0191 243 6017