When HMRC launched a new system for Accountants to complete VAT Registration for their clients on the 1st August, the aim was to make it easier for the agent and faster for HMRC to complete the registration. Sadly that has not happened!

The result is a more complicated and disjointed system, including many backwards steps for agents to work around, resulting in delays for clients.

So what’s gone wrong?

There are a range of issues with the new VAT Registration system, but perhaps the best indicator of the lack of any cohesive thought is that once logged in to it, we don’t have the option to register a client for VAT at all!

Thankfully, industry bodies have been on to HMRC to explain the myriad issues, and have been able to provide some work-arounds. There are still a number of points outstanding, which will cause delays to any new VAT Registration.

These include:

• An inability to register in advance of commencement to trade, which is contrary to UK VAT Legislation.
• Online submission of documents to support the VAT Registration is no longer possible. Instead these must be submitted by post. Given HMRC’s recent poor performance in processing correspondence, this backward step is bound to cause major delays.

What impact might clients experience?

Any business applying for VAT Registration is likely to feel the impact of these system issues, particularly in the short term. The impact will be in delayed registration and increased lead-times for the appointment of any new advisor.

As the system is updated, hopefully the delays and issues will be reduced, but there is currently no timeline in place for the process.

There has still been no general update to the system guidance from HMRC, so accountants are currently reliant on scouring communications from the various governing bodies who are trying to hold HMRC to account to resolve the issues. Given the current economic conditions, our focus needs to be on supporting business clients in other ways.

If you’re not yet VAT Registered, our advice would be to factor in the likely delays. We will let you know the exact current situation at that point.

If you’re already VAT Registered, you shouldn’t be affected, unless you need your accountant to speak to HMRC on your behalf. The previously simple process to appoint an accountant as your recognised VAT agent has been impacted by the new system, and is taking longer.

Please ensure that if you have any reason to think that you may need support with a VAT issue, you let us know as quickly as possible so we can start the process for you.