VAT Registration taking ages

williamgz

Hi there,

I recently setup my LTD and, following accountant's advice, decided to register for the flat VAT scheme. They did all the paperwork for me but the VAT registration is taking longer than expected, and by longer I mean 3 months and counting (it states on the HMRC website it should take around 10 days).

When I enquire my accountants about this they blame it on HMRC and their anti-fraud processes and that they are "dealing with it", but something tells me that the problem is between HMRC and them although I might be wrong.

I'm seriously considering switching to another accountant but since the process has already started I'm scared It might generate even more trouble and confusion so I'm not sure how to deal with this.

I'm kind of scared since I understood that, if VAT registration is finally completed with the date I initially requested it, I will have to re-issue all invoices with VAT included and I will owe that amount until client/s pay the difference which is a big hassle.

Any advice or ideas would be more than welcome.

Many thanks in advance.

TheCyclingProgrammer

Firstly, have you informed your clients that you are in the process of registering for VAT and that they should expect a revised invoice, to ensure you don't have any hassles once your registration is through? You should have done this the moment you applied for VAT as there is a chance that your registration date will be dated back to when you applied.

What you should have done is invoiced them for the gross amount in the first place without mentioning VAT and then re-issued the invoices as valid VAT invoices showing the net amount and VAT.

For example: you invoice for £1000 (net) as £1200, no VAT mentioned. Once your registration comes through you re-issue invoice as £1000 + VAT - same total overall.

The only downside to this approach is it depends on your client's cashflow as they would be effectively paying the amount to cover the VAT but without being able to reclaim it on their VAT return until they have a valid VAT invoice from you.

I find it very strange that your registration is taking so long - have you rung them up yourself to find out what is happening?

Freecall

Welcome to MSE.

HMRC is not the most efficient organization in the world but 3 months for VAT registration is most unusual (in fact I would say unlikely) and therefore wonder whether something has gone wrong with the application.

They normally give you a VAT number well within the 10 days for exactly the reason you describe, without it you cannot issue VAT invoices.

I would ring HMRC and ask why things are taking so long, they can actually be quite helpful. The VAT registration itself and registering for the flat rate scheme are two separate processes but they should be able to tell you where you stand on both. The flat rate scheme approval usually follows slightly after the VAT registration but this is less urgent as you can start issuing invoices as soon as you have the number.

As a side point, your accountant's explanation seems very strange to me. Thy should be more than aware of the difficulties that this might cause you.

williamgz

Thanks for the reply!

I already informed my clients that I was in the process of registering for VAT but I couldn't add the VAT amount to the invoices since, as both my accountant and them pointed out, my registration could be rejected and they would've been overcharged for the rate was pre-agreed.

I got ahold of of a reference number for the registration process so I might call them myself and check what's going on.

williamgz

Well, I've had a bit disappointing call with HMRC. After being redirected from one number to the other they told me my accountant should have received some kind of communication as of why is taking so long and what is the estimated time and without that they cannot effectively follow-up the status of the application

Furthermore it gives me the impression the accountants haven't told me everything. So at this point I'm !!!!ed off so I'm going to relax for a couple of minutes and then call my accountants and bring hell to them. :mad:

Oakdene

Do you have you government gateway user id & password? You can log on there & see all communication from HMRC as to the status of the application...

I set a client up 2 weeks ago & it took 7 working days in total from submitting the application to getting notice of successful registration.

williamgz

Well, just another disappointing followup...

Had another call with my accountant but yet again nothing came clear. They still say that this is due to HMRC requiring more resources for additional investigation as they might have received fraudulent registrations lately and that it is happening in about 15 of their registrations.

This to me sounds weird on so many levels but well... not sure what else I can do.

@Oakdene no, i don't. This process was started by my accountants. I could register now for the GOV gateway but not sure how can i link my current application to this account and I don't think starting a new one on my own would be wise either.

At this point it seems I have two choices; wait and keep pushing them for updates (this is quite unacceptable as they should be the ones updating me periodically) or start talking with more competent accountants that could sort this mess out.

Anyhow, many thanks for the replies ;-)

Pennywise

Have you spoken directly to HMRC yet? If not, that's what you need to do. They'll talk directly to you so you'll get it from the horse's mouth.