HMRC are currently running a backlog of up to five months for the issuing of VAT numbers. Previously firms were registered for VAT within two weeks. HMRC have commented that 70% of those who register for VAT are dealt with promptly. However, UHY Hacker Young have stated that it is now commonplace for long delays due to anti-fraud checks being carried out.

Previously, companies awaiting VAT numbers during backlogs have been advised to use proforma invoices and advice clients that they will re-issue formal VAT invoices once their number has been received. However, VAT cannot be invoiced for separately as it is against the law for a company to charge VAT when they are not registered. Therefore any fees charged should be enough to cover VAT liability.

Simon Newark, VAT partner at UHY Hacker Young stated: “HMRC staff conducting the fraud checks routinely disregard information contained with the applications and demand the same documents, which are often completely irrelevant, again and again. When I made a formal complaint I was told that because all taxpayers were being equally disadvantaged, no individual taxpayer had grounds to complain that he was being unfairly treated.”

Mr Newark commented: “The backlog at HMRC has never been worse, despite assurances over the last few years that the issue was being resolved,” These delays are causing serious problems for small businesses trying to start up in a tough business environment and are hampering wider economic recovery.”

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