Tax tip: Late VAT registration

Contacting current and former business customers to find out which customers will agree to pay VAT only invoices in addition to the amounts they have already paid is a step that can be taken to mitigate the effects of a late VAT registration. Under regulation 29 of SI 1995/2518 the recipient of a valid VAT invoice for goods or services previously supplied can subject to the normal rules for VAT recovery treat the VAT on the invoice as input tax in the VAT return period during which the invoice is received.

HMRC can under VATA 1994 s 77(4) issue an assessment for underpaid VAT covering a period of up to 20 years to a person that has either not registered for VAT at all or not registered for VAT on time. If this happens it will be important to check and if appropriate...