Can HMRC reject your VAT registration application?
The short answer is no, not if you are making or intending to make supplies in the UK. Yet HMRC are rejecting applications. Sometimes it’s where trade hasn’t yet started but other times it’s just because the business is based outside the UK or has non-UK owners. Whatever the circumstances this is just plain wrong! If you have been refused a registration, please give me a call.
If you are already making supplies or plan to trade in the UK you are entitled to be registered for VAT. Often you might be incurring costs before making any sales and even then you are entitled to be VAT registered and reclaim VAT in advance of making any sales. Even if the plan is aborted and there never is any trade, the entitlement to reclaim VAT can remain and does not have to be repaid to HMRC.
We are hearing a lot of stories and seeing a lot of documents showing that HMRC are sending applicants away and they are wrong to do so. Sometimes you might already be making supplies of goods and simply have to register for VAT. Other times HMRC say you can’t register because you’ve applied too far in advance of buying a property. Either way it makes me quite cross. If you try to argue the point you’re told they are right and you are wrong but sometimes the officers seem to be inventing the rules as they go along.
What this means is that HMRC are preventing businesses, charities, people from reclaiming VAT as soon as they are entitled to claim. They are also failing to collect tax that is due from non-UK businesses because they simply haven’t been able to get a UK VAT registration approved.
HMRC are creating distortion in competition as any existing business can claim VAT as soon as it’s incurred whereas a new venture, like a property SPV, is being unfairly treated by having to wait until they actually own property. A complete nonsense!
If the purchase never goes through HMRC are saying there is no right to claim VAT and that is terribly wrong on so many levels. If you are liable to be registered because you are a non-UK business and have no turnover threshold then you are also in a difficult situation – knowing you need to register but being stopped by HMRC from doing so.
If you have had an application refused I’d be happy to take it forward so please get in touch. This policy has to be resisted. So can HMRC reject your VAT registration application? There is no argument – HMRC are just plain wrong on this.