Potential HMRC delays in repaying VAT reclaims by VAT 652 Error notification

Unfortunately, we have to report instances of HMRC being very slow indeed to repay VAT that has been reclaimed by means of an error disclosure (VAT 652 form) to HMRC rather than reclaimed on the usual VAT return.

There have been instances where HMRC has taken months to make the VAT repayment, even after the claim has been approved. This sort of VAT reclaim might arise, for example, from an accounting system, invoice posting or transposition error that results in VAT being overstated or underclaimed on a VAT return and where it is not appropriate for a return adjustment to be made.

This is not a Covid-19 related-issue and anecdotally it has been said that it is related to the “new” HMRC system that was implemented for Making VAT Digital. From the perspective of fixing whatever the problem is, it probably does not help that the compensation scheme that may apply to the slow repayment by HMRC of VAT return claims doesn’t extend to error disclosure claims. HMRC does not seem to us therefore to be financially accountable for delays from within its own system when repaying VAT to business.  

We would recommend that, if you do submit a VAT reclaim through the error Disclosure route using the VAT 652 form, you do not assume that it is being processed by HMRC in a timely manner. Follow it closely through submission to repayment to avoid the claim potentially sitting with HMRC.

Another small example of where VAT management can get complicated especially in the current environment where cashflow is vital to any organisation. That is why it is important to keep up to speed with VAT and our website contains a range of newsbytes to help you with that. Do sign up to receive our VAT updates straight to your inbox.

If you would like our assistance in this area or on any VAT related issue please do get in touch with us at emailus@centurionvat.com

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