Reply to: Exceeding VAT threshold temporarily

[northernladuk]

For info to this thread for anyone else reading or interested, I was granted the VAT exception.

Nice letter stating circumstances accepted, exception granted and watch out on a rolling 12 month period as may need to register in future.

Thanks for the feedback. Very useful to see a conclusion to posts.

[sifr]

For info to this thread for anyone else reading or interested, I was granted the VAT exception.

Nice letter stating circumstances accepted, exception granted and watch out on a rolling 12 month period as may need to register in future.

[vwdan]

Yeah, TBF, I think everyone and their dog started our with the SJD spreadsheet, which was great.

Still, thank fook for FreeAgent and the like.

Had to dig out some old info that was on my first ever SJD spreadsheet the other month - man, that was a trip down memory lane! It was great for it's day, but I bloody love FA!

[malvolio]

Easy after the event, I think this is a little harsh. If you have always been under the threshold it is reasonable it's not on your radar - I know a self-employed handy-men who very nearly ran into the same thing when they took on a full-time helper and obviously their turnover increased as a result. Luckily they caught it, but if you got a new client at a higher rate or did a lot of 'overtime' work on an hour rate for a few months it could happen quite easily. The threshold is not very high.

£85,000 last time I looked, so not trivial. I have always known what my rolling turnover is month on month (it was on the old SJD spreadsheet and it's on FA these days) but perhaps I'm just picky. Comes of being an ex-accountant I suppose.

Anyway there is precedent. That pillar of upright virtue and acute economic sense St Vince of Cable did exactly the same thing a few years ago, and didn't notice for some months after the payment deadline. HMRC let him off any penalties, saying it was clearly a simple mistake.

I wouldn't rely on that as a defence for anyone outside the hallowed circles of party leaders and ex-leaders though.

[d000hg]

Don't you track your company income so you don't make such errors in the first place? I know, you rely on your accountant to do that. Bad answer, it's your company,, not his.

Easy after the event, I think this is a little harsh. If you have always been under the threshold it is reasonable it's not on your radar - I know a self-employed handy-men who very nearly ran into the same thing when they took on a full-time helper and obviously their turnover increased as a result. Luckily they caught it, but if you got a new client at a higher rate or did a lot of 'overtime' work on an hour rate for a few months it could happen quite easily. The threshold is not very high.

Terrible assumption to make, particularly with HMRC and particularly to do with VAT. You knew you had an issue but you chose to ignore it when you didn't hear back? That's just asking for trouble. Sounds like a complete comedy of errors up to this point. The poor accounting and ignoring issues.

So they found the mistake and wrote to HMRC about it. When it comes to HMRC they generally only contact you when they want something (a bit like Linux) so "no news is good news" is BAU. Writing to HMRC is not ignoring the issue. I personally would have sat very nervously but if you inform HMRC and ask your accountant for advice, that's not a bad start.

[jamesbrown]

Yeah, TBF, I think everyone and their dog started our with the SJD spreadsheet, which was great.

Still, thank fook for FreeAgent and the like.

[northernladuk]

It used to be available free on their website if you could be bothered to hunt for it and generate/give a mickey mouse email address for the validation form. Think this was in the Dolan days, not sure if it is the same now.

Yep, and if you were there long enough nearly every accountant sent it back and forgot to password protect it at some point so plenty of un-locked down versions floating around. It was pretty spot on in it's day. It was a god send when I started using it. But that was 15 years ago. The thought of running your company by spreadsheet when FA is available seems ludicrous today.. but guess if it was good enough back then it should still be OK(ish) now.

Be interesting to see what it looks like now compared to them. Some bought it for bloody millions

[courtg9000]

I didn't realise people still pay for the SJD spreadsheet!

It used to be available free on their website if you could be bothered to hunt for it and generate/give a mickey mouse email address for the validation form. Think this was in the Dolan days, not sure if it is the same now.

[ladymuck]

Being with SJD is a mistake on it's own. There is thread running right now, just below this one about a poster that's had it with SJD and there are many many more if you post.

It's not good staying with them because everything is going ok because it appears with SJD it's only a matter of time before you get in a pickle. If you can suffer their constant change of accountants, the way out of date spreadsheet and paying far too much for all of it then fair play, but it will come unstuck like this. Putting up with all that and then it going badly wrong as well is poor management of your company. Leave now, get a better accoutant, better software, better service and for LESS money. Why people stay with them I really don't know.

I didn't realise people still pay for the SJD spreadsheet!

[northernladuk]

Being with SJD is a mistake on it's own. There is thread running right now, just below this one about a poster that's had it with SJD and there are many many more if you post.

It's not good staying with them because everything is going ok because it appears with SJD it's only a matter of time before you get in a pickle. If you can suffer their constant change of accountants, the way out of date spreadsheet and paying far too much for all of it then fair play, but it will come unstuck like this. Putting up with all that and then it going badly wrong as well is poor management of your company. Leave now, get a better accoutant, better software, better service and for LESS money. Why people stay with them I really don't know.

[sifr]

This may not be a situation where it's easier to ask for forgiveness. As mal suggests, you would ordinarily need to register the moment you know that you will exceed the threshold, and you knew that it would, and then it did (and you failed to do anything, which is sloppy).

This is probably best answered by an accountant (or, in fact, your accountant) who should have some experience of whether they tend to be lenient, but I wouldn't bank on it.

I'll soon find out.

Im not asking anyone here what I should do. Im asking if anyone else here has had the same experience asking for an exception

[jamesbrown]

This may not be a situation where it's easier to ask for forgiveness. As mal suggests, you would ordinarily need to register the moment you know that you will exceed the threshold, and you knew that it would, and then it did (and you failed to do anything, which is sloppy).

This is probably best answered by an accountant (or, in fact, your accountant) who should have some experience of whether they tend to be lenient, but I wouldn't bank on it.

[malvolio]

1. https://www.gov.uk/vat-registration/when-to-register

Get an exception


You can apply for a registration ‘exception’ if your taxable turnover goes over the threshold temporarily.

Write to HMRC with evidence showing why you believe your VAT taxable turnover will not go over the deregistration threshold of £85,000 in the next 12 months.

HMRC will consider your exception and write confirming if you get one. If not, they’ll register you for VAT.

2. I dont rely on my accountant. I made an error in my calculation when 'totting it up' on the rolling basis


Hindsight is a wonderful thing. Its happened, so will be dealt with so no point making assumptions about me.
The question is how have any others applied for exceptions and what was the result.

The assumption is, I know my turnover for the year to date and I can see when (or if, these days) I am going to exceed the threshold. And that is the point where you apply for an exception, not afterwards. And is why I doubt many of us will have applied for one.

The SJD spreadsheet is also a bad tool for such things. Freeagent (other tools are available...) is used for a reason - including proper rolling P&Ls.

[sifr]

I assume you aren't on Freeagent so a move that would help?

I use the SJD spreadsheet for my bookeeping, modified for the changing tax rates. As i said, it was a calculation error.

I was going to be moving online to Sage just before the contracts ended, which would align to payroll, but when income = zero it was delayed.

Current contract not expected to exceed VAT threshold. If I get VAT registered if/when the exception isnt granted, I will deregister swiftly afterwards.

[northernladuk]

No feedback was received from HMRC VAT, so assumed all was good

Terrible assumption to make, particularly with HMRC and particularly to do with VAT. You knew you had an issue but you chose to ignore it when you didn't hear back? That's just asking for trouble. Sounds like a complete comedy of errors up to this point. The poor accounting and ignoring issues.

No tax, and particularly VAT works on a credit system where you earning nothing the year after you go over means anything.

Regardless of sorting this particular issue, you need to look at your whole accounting set up to make sure this, and anything else, happens again. You taking more of an interest in your accounts would help here. Regularly reviewing and being aware where you are is essential for (now) obvious reasons. If VAT is quarterly why did it need your year end accounts to spot it. You must have been close by your 3rd quarter knowing it was going to continue. Anyway, shore up your accounting so make sure anything like this doesn't happen again.

I assume you aren't on Freeagent so a move that would help?