Has HMRC refused your VAT registration?
by Melanie Lord : AVS Vat Strategic Support
HMRC are refusing to accept applications to VAT register where trade hasn’t yet started and this is just plain wrong! If you know someone who has been refused a registration, please give me a call.
Any organisation making plans to trade and incurring costs is entitled to be VAT registered and reclaim VAT. Even if the plan is aborted and there never is any trade, the entitlement to reclaim VAT remains and does not have to be repaid to HMRC.
To be told this morning by HMRC that they are sending applicants away because they’ve applied too far in advance of buying property makes me quite cross. If you try to argue the point you’re told you’re not being very co-operative. Press home that prior cases show time and again that VAT can be claimed on lead costs while a project is developed and you’re told that’s not HMRC’s policy.
What this means is that HMRC are preventing businesses, charities, people from reclaiming VAT as soon as they are entitled to claim. HMRC are creating distortion in competition as any existing business can claim VAT as soon as it’s incurred whereas a new venture, like a property SPV, is being unfairly treated by having to wait until they actually own property. A complete nonsense!
If the purchase never goes through HMRC are saying there is no right to claim VAT and that is terribly wrong on so many levels. We have had this message before out of Wolverhampton but it seemed to go away for a while. If you know of any application that’s been refused I’d be happy to take it forward. This policy has to be resisted. There is no argument – HMRC are just plain wrong on this.