Sound advice with regard to alleged underpaid VAT demands

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Sound advice with regard to alleged underpaid VAT demands

VAT is an obligation imposed on large, small and micro businesses, including IT contractors, and some sound advice has been provided for when the taxman comes knocking.

When the authorities search through the books for underpaid VAT, they can only go back four years. According to tax group CCH the VAT man has been exceeding his authority and searching back beyond this four-year deadline.

CCH VAT consultant Julie Green explained: “HMRC VAT officers may try and exceed the four-year assessment cap. If … [firms] receive assessments for VAT, not only should they check that the grounds for the assessment are correct (assessments can be issued in error), but also that the assessment is for the correct period.”

The regulations imposing time limits for checking VAT errors are covered by Section 73/77 of the VAT Act; however, there is one important thing that fellow IT contractors and other business people should not forget ‒ the four-year period does not apply to instances where there is suspected late VAT registration. In these situations HMRC can check as far back as 20 years.

If you receive a demand for underpaid VAT, double check everything and make sure that HMRC is not exceeding its authority.

Meanwhile, IT contractors are being given another tool to help them to avoid clients with bad payment records. This is due to Companies House making its digital data available for free.

Contractors can now check in excess of 170 million records on companies and view, among other information, the financial details of would-be clients.

Companies House explained: “Free access to the data is available both through a web service and an API, enabling both consumers and technology providers to access real time updates on companies.”


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