A recent Tribunal Case has highlighted the pitfalls when applying for VAT registration and ensuring the correct date of registration is applied for at the time of application.

The case involved a property developer who applied to be registered on 28th July 2008, but subsequently asked for the effective date to be back dated so that she could recover further input tax that had been incurred from 2005. HMRC refused this application which was the subject of the appeal, based on whether HMRC were acting reasonably in these particular circumstances.

The guidelines are clear in that HMRC can, in certain cases, change the effective date of registration to an earlier date but  only in very limited circumstances. For example, if there has been a genuine error in completing the VAT1 by the person registering the trader, or the trader can demonstrate that there was a genuine misunderstanding  in completing the application form. The request for a revised effective date must be also made before the due date of the first VAT return.

The Tribunal considered all the circumstances in this particular case and dismissed the appeal ruling saying that HMRC had acted reasonably.

 This refusal cost the tax payer over £12,500 in lost input tax, proving that it is critical that the right registration at the date of submission of the application is made.

Should you require any further information on this or any other VAT matter please contact Zaenia Rogers on 01962 735350 or by email: zaenia.rogers@thevatconsultancy.com.