VAT Refund Delays

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How Delays Happen

Businesses that are registered for VAT must submit their VAT returns to HMRC every three months. The details they must submit include total sales and purchases, the VAT they owe and can reclaim and what their VAT refund from HMRC ought to be. Even if a business has no VAT to pay, it must still submit a VAT return. 

When businesses charge less VAT to their customers than they pay on their purchases, HMRC repays the difference between the two figures. This is not the only reason a VAT repayment may be due, but it is certainly the most common. It is at this point that delays occur;  they can have a considerable effect on cashflow within companies, especially SMEs. Cashflow issues arise when an expected amount of money (that is, the HMRC VAT repayment) is not paid to a business when it is due. 

Minimising Delays

From receiving a business’ VAT repayment return, HMRC has 30 days to make enquiries before sending back any repayments owed. HMRC is more likely to query the VAT return if the repayment amount seems particularly high. It goes without saying that businesses must thoroughly check all details on their VAT returns before submitting, making sure that they supply suitable evidence for a repayment claim.

If HMRC discovers an error, the 30 day period is stopped and it will not process the return until it has completed its enquiries. Businesses should also seek to ensure that their VAT repayment return is submitted as early as possible – HMRC’s 30 day enquiry period begins as soon as the return is received. Businesses should make sure that they have provided HMRC with valid bank account details so that repayments can be made swiftly and efficiently. It will only pay into UK bank accounts for its electronic transfers; overseas accounts are not accepted. If HMRC has made an enquiry into a businesses repayment return, it may take an extra ten days for repayments to appear in a business’ bank account. 

HMRC Queries

Whilst most VAT repayment delays occur because HMRC has begun an enquiry, businesses can still act to ensure the money they are owed is received as quickly as possible. When the VAT repayment is particularly high, businesses can send evidence to back up the VAT repayment return to HMRC’s written enquiries department by post alongside reasons for the claim. This process can be used to pre-empt any enquiries. Where possible, businesses should also provide HMRC with details of expected future repayments. 

MCC Chartered Accountants, Manchester 

Are you struggling with your business’ tax affairs? Contact MCC Chartered Accountants, Manchester, on 0161 707 1500 to speak to one of our team and find out how we can help you.   



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