VAT top tip!

If your client changes address, they should notify HMRC within 30 days.  If not, HMRC will at some stage write to them and either not receive a reply, or will have the letter returned by the post office.  This may happen quickly, or it may happen 6-18 months etc later when any redirection runs out.

Who cares?

Well, when HMRC don’t get a response they will assume the client is a “missing trader” and will automatically turn off their ability to submit VAT returns.  The first the client will know is when they try to submit a VAT return online and find there is none due for submission, when they know there should be one.

Action: The client we should contact HMRC immediately, explain what has happened and provide the new address details as appropriate.  HMRC will then turn the VAT returns back on.

Interestingly (well for me at least!), HMRC then alter the last VAT return period from a 3 month to a 6 month period (or longer if required), so the client has effectively gained 3-4 months+ in which to submit its VAT return (which will be for a longer period), before going back to the usual routine.  If the client regularly pays VAT then this creates a nice temporary cash-flow benefit.  If it regularly reclaims VAT it will suffer a corresponding VAT cash-flow delay.

This happens more often than you would imagine.  If your client is moving (or has moved address in the last few months/years) please remind them to update their address with HMRC…details can be updated online.