If you have a query about VAT, how do you find the right answer? Do you:
search GOV.UK and end up going round in circles;
ring the HMRC VAT helpline and wait for a human to answer; or
ask the HMRC officer who is conducting a VAT inspection?
None of these routes are guaranteed to provide the correct answer, and may well raise your blood pressure to an unhealthy level. Graham Swann who was the accountant acting for Whiston Motor Factors, decided the third option was the best course of action.
When the company had a VAT inspection in January 2011, online filing for VAT returns was only compulsory where the turnover exceeded £100,000. The VAT inspector encouraged the company to file their VAT returns online saying they would get an extra three days to pay the VAT due. The VAT inspector did not clarify that the extra three days only applies if the business pays the VAT due by direct debit.
After that VAT inspection Mr Swann instructed all his clients to pay the VAT due by 10th day of the second month after the end of the VAT quarter, instead of by 7th day of that month. He knew the due date for VAT paid electronically was 7th of the month, but he took the VAT inspector’s “advice” at face value without double checking with other sources.
Whiston Motors did not set up a direct debit and paid its VAT by electronic means after the 7th day on at least six occasions. As a result it was issued with a 15% surcharge penalty for late payment.
If you are surprised by VAT “advice” given by HMRC, double check the position with one of our VAT experts.