VAT – Back-dated registration case
A recent case heard at the First Tier Tribunal focused on a costly error in completing a VAT ‘application for registration’ form.
The taxpayer’s advisers took a simplistic approach and requested VAT registration from a current date for their client, a project manager for a property development company. HMRC, following a number of checks, registered the taxpayer with effect from the date specified on the application form, 11 September 2007.
Subsequently, the taxpayer wrote to HMRC to seek backdating of the VAT registration to 1 July 2006. This was to allow for VAT recovery on costs incurred which would be out of time if the September 2007 registration date stood. Whilst the taxpayer could have originally applied for an earlier registration date (known as the effective date of registration) this was not done at the correct time and HMRC refused the request for a backdated change to the date of registration.
The Tribunal ultimately agreed with HMRC’s decision for a number of reasons including that a backdated registration date can only be applied for by a taxpayer who was neither VAT registered nor liable to be VAT registered. This was no longer the case in this instance.
In an interesting final comment the Tribunal Chairman agreed ‘… that it is not HMRC’s responsibility to check for the most advantageous registration date. The responsibility rests with the taxpayer.‘ The taxpayers appeal was dismissed, an expensive lesson in correctly completing the VAT application form.