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Failed VAT Repayment

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    Failed VAT Repayment

    I want to understand whether I would be likely to get HMRC to accept any responsibility over the following issue... I don't want to bother taking it further if there is case law that would render any such action a waste of time and money.

    The circumstances..

    Company changed address and sort code at the bank at the same time. HMRC/VAT was notified. VAT repayment became due and was not paid. It was not a huge sum but was significant enough to warrant my question here.

    It was chased up and it came to light that the cheque had been issued to the old address and of course disappeared but was never presented or paid. VAT office agreed to cancel cheque and reissue payment via BACS. Subsequent repayment was posted into the system using the old Sort Code and was rejected by the bank.

    At this time, I was trying to close the company and had set closure in motion.

    By the time HMRC actually got around to making the second BACS payment using the correct Sort Code, Companies House had finished their work and notified HMRC who now decided not to make the payment and to treat the funds as bona vacantia.

    HMRC/VAT had been notified of the change in both address and sort code. Also for several years VAT had been paid using the current sort code, not the old one. VAT had my mobile phone number for contact purposes and had indeed used that number to organise compliance visits and to offer their training courses/seminars.

    During this time, VAT did not contact me once to discuss any of the failed payments and (at the front line) refuse to accept any responsibility for the issue. There was something like eight months between the repayment becoming first due and the final failed payment and subsequent transfer of the funds to the Treasury Solicitor.

    I understand that I could petition the court to reinstate the company and so forth. That is not really an option because to do so would swallow up any benefit and more of reclaiming the money owed. HMRC know this of course.

    What I am looking for is advice from anyone who has actual experience of this issue or from any of our resident accts people who actually may know what the law is.

    Yes, I know I should have camped on their doorstep from day 1 and made a nuisance of myself until it was paid but having a life and a business makes that a little difficult. I am not going to die of starvation because of it but as I said earlier it is not an insignificant sum and of course, there is the principle.

    This is primarily HMRC's error but as an aside, what is the banks responsibility where sort code errors occur? This must have been on an exception report somewhere and by law, a company name must be unique even if an account number can not necessarily be unique (although it is when used with a valid sort code). Should my bank have notified me of the failure so that I could have acted earlier?
    Last edited by tractor; 3 December 2011, 14:02.

    #2
    I know with CT I've successfully argued that the repayment should be made to the director personally, as requested on the final CT return (but not done). This was after the company had been dissolved, but the money hadn't been passed to the Treasury.

    Have you thought about Administrative Restoration? It's cheaper than a full Court petition, and you could then reinstate the company & approach the Treasury for the funds. You might lose some in an 'admin' fee to the Treasury, and the restoration costs £100 with Companies House, but still the cheaper option. Of course it depends on whether the refund is worth it, and whether you're happy to do this yourself rather than appoint a professional (it should be easy enough, the Treasury are quite nice to deal with in my experience).

    Guidance - strike off, dissolution and restoration (GP4)
    ContractorUK Best Forum Adviser 2013

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      #3
      ..

      Originally posted by Clare@InTouch View Post
      I know with CT I've successfully argued that the repayment should be made to the director personally, as requested on the final CT return (but not done). This was after the company had been dissolved, but the money hadn't been passed to the Treasury.

      Have you thought about Administrative Restoration? It's cheaper than a full Court petition, and you could then reinstate the company & approach the Treasury for the funds. You might lose some in an 'admin' fee to the Treasury, and the restoration costs £100 with Companies House, but still the cheaper option. Of course it depends on whether the refund is worth it, and whether you're happy to do this yourself rather than appoint a professional (it should be easy enough, the Treasury are quite nice to deal with in my experience).

      Guidance - strike off, dissolution and restoration (GP4)
      Thanks for the quick reply. I have considered that route but of course, and you were probably expecting this, the final accounts could not be paid for because I was waiting for this money. So it became the proverbial rock and hard place. I wasn't prepared to pay out for the accounts after the money was transferred to the Treasury Solicitor. This situation did occur primarily because HMRC did not act on the notifications of change of address or sort code. So, in short, administrative restoration is probably not the answer. I suspect the best route would be to get HMRC to accept liability and hopefully put things right as a result of that admission. To chase this through the Treasury Solicitor opens up another layer of legislation and beauracracy and potential cost which I could do without. I could apply for a discretionary grant from the TS but this would require involvement of an ex-partner who is very likely to be unhelpful at the least (this is why the change of co address and subsequent 'lost' cheque). So signed affadavits etc are out I am afraid.

      I read somewhere in the VAT operations guide that HMRC are supposed to check items on the To Do list at the end of each month in order to expedite outstanding repayments etc. Well, they failed to to this for eight months running. I didn't know anything about their internal procedures at that time but I'm researching it now.

      I have done some research so far and I suspect that my best option is to make an official complaint to HMRC. I simply wondered whether anyone else had experience of this type of situation and what their advice would be. Do HMRC take complaints seriously? I know they are supposed to but does that pan out in practice?

      Thanks again.
      Last edited by tractor; 3 December 2011, 14:33.

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