One of our clients neglected to register for VAT despite breaking the VAT threshold, although we had advised them to register. This was a genuine oversight by the client who fell ill shortly after our advice
HMRC launched an investigation to ensure that the client registered for VAT and paid any amounts due. We did advise them that the effective time for registration was only a 9-month period and therefore they should have registered and then de-registered later on within the same tax year.
HMRC then raised an assessment of £10,638 based on VAT that was due less 5% estimate to recover input tax. From here we took two courses of action; the first was to appeal against the 5% input tax recovery and evidence that this should be nearer 15%. We then contacted the person that he worked for and agreed with him that our client would issue a VAT only invoice which was then paid (this did not affect his client as they were VAT registered).
The outcome was that our client only had to cover £135.96 of the original assessment of £10,638.