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VAT fined me £1000.....My appeal.

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A little under 3 years ago I closed my limited company to take a couple years off. After the last day of trading, I chose to personally buy all of its unsold stock at cost price plus vat, and the company correctly accounted for the transaction and paid the vat to the Revenue.

 

Now, I have opened a new business. In my first VAT return I tried to reclaim the VAT on the stock that I had purchased. The Revenue decided that I was not allowed to re claim the VAT because the invoice to support the transaction was not a valid invoice.

 

(I had not issued myself with an original invoice, and therefore wrote it two years later). The vat man said the invoice was not valid as it was not possible for the limited company to have issued it, as the company had closed.

 

The principle that the vat iwould be reclaimable, is correct. But according to the vat man I must have the original invoice.

 

The question is, that if the banks can write reconstructed credit agreements, why cant I reconstruct the invoice?

 

My accounts do prove the vat was originally paid to the Revenue in 2007.

 

So the Revenue say I made a careless mistake and have fined me £1000 and I dont get the £4000 in vat that I paid for the stock.

 

How can I word the appeal?


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I think there is a big difference to a bank reconstructing a lost agreement and the issue of a receipt from a company that does not exist.

 

Writing a receipt now is not reconstructing as that infers that a receipt did exist and you are bringing it back to life. You would, of course, have the copy receipt to do that, but you don't so they are naturally suspicious that a fraudulent action is being attempted.

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If you bought the goods off the company after it had finished trading then surely vat would not have been payable as the registration would have ceased, in which case you could try claiming the original vat back as an overpayment.

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Excuse my confusion but what do you exactly mean when you say you "closed your Company down"? Did you notify Companies House and then buy the stock after your company had been struck off? Who actually owned the stock between the time you ceased trading and the time you bought the stock?

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Was the company subject to bankrupcy?

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The shop closed in July 2007 when I sold the lease. My last customer was on the saturday and I packed up and vacated the shop over the weekend. Then, in the next week, I personally bought the remaining stock at cost price plus vat (I was therefore the very last transaction). I banked the money, entered the transaction in the accounts and paid the vat to the revenue. I simply did not write myself a physical receipt. Now, when I want to write it, the revenue say I cant as the shop officially ceased once companies house received the final accounts a couple years ago.

 

The principle is that I would be able to reclaim vat paid in any purchase up to three years before the commencement of a new business. So I would be able to reclaim the vat, if I had the issued myself a sales receipt.

 

Instead, I now cannot claim back the vat, and I have to pay a large fine for trying to.

 

I am making an appeal and looking for an argument to support my case.


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As frustrating as it is, its just one of those things, you made a mistake in not writing a receipt and especially as years ago, you really have to accept no means no sometimes.

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If you personally bought the good from your limited company I assume that you personally were not registered for VAT. The goods were thus owned by you personally as a non-VAT registered person. So why did you charge your new business VAT on these goods?

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If you personally bought the good from your limited company I assume that you personally were not registered for VAT. The goods were thus owned by you personally as a non-VAT registered person. So why did you charge your new business VAT on these goods?

 

Thats what I guessed. Its not as if one new limited company set up that same year bought the products from the other, it was personal. So hard to justify.

 

I suppose same as buying any product from store closing down, we still pay vat on the purchase. It would be hard to justify claiming back the vat paid to sell in another company years later with no receipt even.

 

I thought company vat also in such transactions had to be claimed back the following year at the latest for tax purposes.

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The new business was a sole trader. I therefore bought goods from a closing down ltd company in order to resell them in my new business once it commenced trading. This is what all retrailers do. They buy stock and resell it. The law allows all such purchases to have the vat reclaimed within three years of the purchase. If you are a sole trader and not vat registered, you cannot claim back any vat regardless, but once your business becomes vat registered (as long as the stock purchase was within 3 years) you can claim the vat back on all the stock that still remains in the business upon registration. My only mistake was not writing myself a receipt and this is the principle I need to address.


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I think that the phrase "My only mistake was not writing myself a receipt" encapsulates the problem here. Any such receipt (even though you personally may have written it out) would not have been given by you, but by your company. You and your company were two different things. Since the company no longer exists it cannot do anything. If no receipt was issued by the company the position cannot be rectified.

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I agree with you Aequitas. And that is the question I have to make an argument for. I would try to show that the amounts were all correctly accounted for and the vat tracked through the accounts to the payment to the revenue. By showing that they did receive the vat, I wonuld hope a tribunal would accept the position. But I still need an argument supporting my position. So far this thread seems to argue for the revenue, not for me. So any supporting views for me would be gratefully acknowledged.


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Sometimes we dont always here what we want to hear. If there was such an argument, you can bet a cagger would give it to you.

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I think that only someone who has a detailed knowledge of the VAT rules will be able to answer your question and advise if there is a way out. In the absence of professional advice, the best you can hope to do is to put it to the tribunal that the whole thing seems unfair.

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Guest wino

When we had our own business we had a few problems with the drivers not getting fuel receipts sometimes.

 

If they produced a receipt we could claim the VAT if they did not have a receipt we could put the cost in the accounts but without a valid receipt could not reclaim the VAT. As you don't have a valid receipt you will not be able to reclaim the VAT. I believe that the HMRC fines are excesive.

 

I have received fines from HMRC for late filling of returns and non payment of Corporation Tax even though we stopped trading in 2007 and all returns were up to date. The fines kept adding up (approx £30,000) and eventually we had to employ the services of an accountant who understands the workings of HMRC. Eventually all fines were squashed and I was left with a tax liability of 40p. The accountant wasn't cheap but certainly worth the money.

 

It might be worth your while booking a consultation with a VAT expert.

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I think low value vat receipts are a different matter, because you cannot prove the transaction. My transaction £37,500 was the only sales transaction on my last vat return. It is very obvious tracking it through the business records, including the revenue banking the vat that I paid. My argument rests on the fact that the vat is obviously due back to me, whether or not I can produce the receipt.

 

I do not believe I should have to be inventive in trying to 'find' it. It would be easy to ask the printer to print me off the next number sequence of my old businesses receipt books for instance. It would be illegal though, and I simply am not that naughty, although it would do the trick. I bet the Revenue know that, and realise they have no defence if they couldnt proove I was tricking them. I kind of hope they might realise that my producing the receipt would therefore be a pointless paper chase, so they might as well accept to pay me back, especially as I am sure, they are not too happy about having tribunals to fight.

 

Alternatively I could argue that my computer speadsheet constituted the receipt as it individually listed all the items and values.


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or you could simply admit you made a mistake. albeit an expensive mistake


Please note:

 

  • I am employed in the IT sector of a high street retail chain but am not posting in any official capacity,so therefore any comments,suggestions or opinions are expressly personal ones and should not be viewed as an endorsement or with agreement of any company.
  • i am not legal trained in any form.
  • I have many experiences in life and do often use these in my posts

if ive been helpful kick my scales, if ive been unhelpful kick the scales of the person more helpful :eek:

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What exactly is the fine for? What did it say exactly in the documentation that told you about it?


Please note nothing I say constitutes legal advice.

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It was for a careless mistake at 5% the loss that the Revenue say they would have incurred. They are now saying that if I can produce a duplicate invoice, they will look at it again. In which case, I guess they might allow the refund and reduce the fine. There are 2 other mistakes, but they are not so important and were genuine mistakes.


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I am all in favour of DIY, but what I think your experience shows is that when you are in business it pays to get professionals on board and the most important professional to get on board is an accountant. VAT in particular is a minefield for the unwary and it is easy for even the most honest to fall foul of the law.

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