HMRC raises VAT426 invoice submission threshold to £30,000

HMRC now asks insolvency office holders to provide supporting invoices with VAT426 claims of £30,000 or more, replacing the previous £20,000 thresholdGOV.GOV The change affects claims for input tax after cancellation of VAT registration.GOV A claim between £20,000 and less than £30,000 no longer meets the handbook’s stated threshold for sending supporting invoices with the claim.GOV

The higher submission threshold does not remove the recordkeeping requirement.GOV The handbook continues to require all invoices supporting a claim to be kept with the relevant books and recordsGOV in case HMRC selects the claim for verificationGOV. Office holders should adjust their submission checks while retaining the evidence needed to substantiate the amount reclaimed.

The handbook lists five types of office holder who can use VAT426: trustees in bankruptcy; trustees in sequestration (in Scotland); official receivers; liquidators; and administrative receivers.GOV Its separate exclusions include liquidators in a members’ voluntary liquidationGOV and administrators in company administrations.GOV VAT427 is specified for members’ voluntary liquidations, administrations, Scottish trust deeds, deeds or schemes of arrangement, and voluntary arrangements.

The underlying relief remains limited. The handbook allows claims for services supplied after VAT registration was cancelled where they relate to the earlier business’s taxable activitiesGOV, and for goods and services supplied and invoiced before cancellation where the tax has not already been claimed on a VAT ReturnGOV. The handbook excludes input tax relating to pre-insolvency tax periodsGOV and a petitioning creditor’s costs, charges relating to exempt suppliesGOV, and pro forma invoicesGOV. It states that there is no relief for goods supplied after cancellation or services not attributable to taxable supplies.

Regulation 111(5) applies to a person who has been, but is no longer, a taxable person. It permits repayment of VAT on services supplied after deregistration and attributable to taxable supplies made in the business while the person was registered or required to be registered. The claim must be made in the manner and supported by the evidence HMRC requires. Regulation 111(6) normally limits these claims to four years after the services were supplied.Legislation

Completed VAT426 claims should be sent to Debt Management — EIS NCL, HM Revenue and Customs, BX9 1SR. HMRC’s revised statement is that it will process a complete and correct claim within 30 working days of receipt.GOV Verification remains possible, and HMRC may withhold repayment until its enquiries are complete.GOV

The statutory basis for relief on services supplied after deregistration is the Value Added Tax Regulations 1995, regulation 111(5)–(8).Legislation