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Compensation for VAT registration delays?

Published on Aug 12, 2007 |

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In early July, our small business site - Bytestart, reported that new VAT registrations are taking up to 4 months to be processed - causing financial hardship for some firms.

The Tax Faculty of the Institute of Chartered Accountants (in England and Wales) has called for action over the problems caused by the severe delays in new VAT registrations.

Many new IT Contractors are known to be caught up in the system - some having waiting several months before receiving a new VAT Registration Number.

According to the ICAEW;
"the Government, HM Treasury and HMRC are aware that the continuing and increasing delays in processing VAT registrations are damaging to business, both in time and cost. We are concerned that the continuing delays have damaged HMRC's reputation and will act to discourage good tax compliance from taxpayers."

The ICAEW claims that the recent delays have been caused by increased vetting to prevent fraud - the new scale of checks having been implemented without ensuring that adequate personnel resources were in place.

The Tax Faculty also suggested that this matter is of such importance that it should be the subject of an inquiry by a Parliamentary Committee

Other recommendations include providing compensation for businesses that suffer financially as a result of the delay.