fbpx Skip to main content

HMRC Compulsory Online VAT Filing: 3 SMEs already affected

By December 12, 2014November 28th, 2017No Comments

HMRC’s ‘ VAT: consultation on the next steps for moving VAT online’ document was released on the 8thof August 2011…


The VAT consultation document discusses how HMRC will assist and support their Digital by Default agenda.


HMRC proposes that from 1 April 2012, it will be compulsory forVAT registered businesses with a turnover below £100,000, to file VAT returns online and pay VAT due by electronic payment.


It will also be compulsory for such businesses to register and de-register forVAT, along with changes to registered details.


HMRC’s ‘VAT: consultation on the next steps for moving VAT online’ is open for response until the 31 October 2011; to receive views on areas where digital assistance will be required and how this should be provided.


HMRC say that moving VAT filing, electronic registration and payments online will save £60m to £90m a year.


Previously businesses with a turnover on or above £100,000, before 1 April 2010, and all newly registered businesses no matter their annual turnover, since 1 April 2010, have had to fileVAT returns online and pay forVAT electronically.


Whilst businesses set up before 1 April 2010, with a turnover below £100,000, had the choice to continue theirVAT filing on paper or online. From the 1 April 2012, this option will no longer be available and online VAT filing will become a legal requirement.


But what does this mean for those who have no means of accessing the internet or are digitally illiterate?


HMRC’s consultation document includes two exclusions for mandatoryVAT filing online. These are businesses:


    • ‘subject to insolvency procedures’



    • ‘run by people who are practising members of religious societies or orders whose beliefs are incompatible with the use of electronic communications (that is, forbid the use of computers).’



(Section 2.6 of HMRC’s ‘VAT: consultation on the next steps for moving VAT online’)


So far, three SME business owners – with an annual turnover above the £100,000 bench mark – have argued their case against the taxman.


All three business owners believe that compulsory VAT filing and registration online will incur expenses which they cannot afford.


The test cases include a company which cannot afford to buy computers just for filing purposes, an individual with severe arthritis and sight problems and another who has no access to broadband services in their area.


All above cases went to a pre-tribunal hearing in November 2010, the three businesses are currently allowed to continue using paper filing until there is a settlement between them and HMRC, or a tribunal ruling is reached.


The Treasury Select Committee’s report on the administration of HMRC’s tax system, said:


“HMRC should always ensure it has robust, well advertised alternatives in place for those who cannot submit online and publish a statement of its commitment to continue to provide a robust free filing service for basic tax return filing.”


HMRC have offered two options to the three cases and businesses in similar positions:


    • Appellants must use an advisor to file their VAT returns; or



    • They can submit their VAT returns via the phone to HMRC.



Recent problems with HMRC’s telephone lines; highlighted by the Treasury Select Committee report, do not instil must confidence in the taxman’s second given option.


Kevin Kinsella Jnr, of KinsellaTax, says:


“The proposals and offers that HMRC have given these three businesses are currently unacceptable.


“HMRC’s Digital by Default agenda must make exceptions and accommodate for those who are unable to access or perform VAT filing, registration and submit payments online.


“I hope that HMRC will set out clear guidelines and digital assistance for businesses in the country who cannot afford computer systems, are unable to access broadband services, or have disabilities that prohibit such actions.”


The consultation for theVAT proposal closes on 31 October 2011.


HMRC are asking for taxpayer responses on the ‘VAT: consultation on the next steps for movingVAT online’ document. Questions include:


    • Are there any groups or businesses which are likely to experience real difficulty in filing online (other than those businesses mentioned above)?



    • Do you have any views on the proposed new online system for VAT registration, deregistration and variations?



    • Do you have any comments on the proposed handling of notifications that are made other than via the online system?



    • Do you see barriers to using the new system – and if so, what would help overcome those?



    • Are there any particular types on communication material that you would find helpful?



(Section 7 of HMRC’s ‘VAT: consultation on the next steps for moving VAT online’)


Responses can be made to HMRC’s VAT filing consultation document via email or post to HMRC.


VAT fraud tax enquiries are serious and anyone undergoing a Value Added Tax (VAT) fraud investigationby HMRC should have strong and reliable representation from the outset.


If you think HMRC suspect you of any kind of tax fraud or VAT fraud, or you have already received that dreaded tax enquiry letter from HMRC.


You need to contact a tax enquiry expert IMMEDIATELY.


KinsellaTax staff consists of ex-HM Inspector of Taxes and ex-HM Custom and Excise Officers, fully experienced in HMRC investigations.


To put your mind at rest call us NOW on 0800 471 4546 to speak to one of our many experienced VAT Fraud investigators.