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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: VAT: pre-enforcement action: customer contact

Phone contact

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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Person to contact

Section 18 of the Commissioners for Revenue and Customs Act 2005 (CRCA) makes clear that you must not give (disclose) HMRC information to anyone, unless you have lawful authority to do so. This includes other government departments and their agencies, local authorities, the police or any other public bodies.

Therefore the debt should normally be discussed with a person in authority such as the proprietor, partner, director or secretary of a company. Discussing the taxpayers’ affairs with an employee may constitute a breach of taxpayer confidentiality.

It may sometimes be in the taxpayers’ interest to disclose information about them to a third party (e.g., a taxpayer may wish to deal with the department through an agent, accountant or other representative). Where an agent begins to represent a client on VAT matters, the taxpayer should complete and sign a form 64-8, which is available from the HMRC website. The form provides an authority for HMRC to disclose issues to the authorised agent and to accept notification of changes from agents acting on their client’s behalf. In all cases, the taxpayer must sign the consent and the signature should be original and not a photocopy.

Further information regarding disclosure can be found on the intranet under Information Disclosure Guidance (IDG).

Timing of calls

Phone calls to taxpayers should be made at different times of the day and at times where the business type indicates that the taxpayer is likely to be present. Early/lunchtime/late calls may be successful for taxpayers who are unavailable during regular working hours.


The appropriate system should be noted with relevant details if you make a telephone call. Additionally information that will assist future contact and recovery of debt should be recorded, e.g. who and when best to contact, with their alternative telephone numbers, details of the business if specific closed times/days etc.

The 64- 8 forms authorising agents/third parties are captured in Electronic Folder (EF)

Additionally if there is already a work item for VAT on IDMS the 64-8 box should be ticked.

The representative’s details should also be updated on the Agent tab in ‘Other Addresses’ within Designatory Details on IDMS. For more details, see DMBM950050.

Management / quality checks may be carried out to ensure that recovery action is not delayed and that such calls have been followed, where appropriate, by prompt and more vigorous action.

Contact Letters

In the event that telephone contact with the taxpayer has not been successful it may be necessary to:

  • issue a letter to the taxpayer in order to establish contact
  • advise the taxpayer of the debt
  • request that they make contact as soon as possible to discuss their options.

When contact is made with the taxpayer, request any outstanding returns, especially if the taxpayer wants to discuss time to pay (see the ‘Requesting outstanding returns’ section below).

The taxpayer may when contacted also request a tax debt breakdown or ledger information.

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Requests for tax debt breakdowns or ledger information

To ensure a consistent approach, all requests to DMB from VAT taxpayers for a VAT ledger breakdown will be handled by the VAT Written Enquiries Team (VWET) in Southend. All requests should be routed to them. VWET will action requests and also manage any subsequent enquiry relating specifically to that request. The taxpayer or their authorised representative should be directed to write to VWET preferably using the online template which is available through the HMRC website in the ‘where to write email/write to’ section.

If a taxpayer or authorised representative requests a breakdown of a debt, the DMB office dealing with the case should initially attempt to provide a brief explanation on the phone using IDMS, or the Head of Duty systems (the VISION Ledger and Outstanding Liability table for VAT) and should negotiate payment of the outstanding amount.

The taxpayer or representative are to be reminded that information regarding liabilities due and amounts paid should have been retained as part of their accounts.

If they persist in asking for a written breakdown, in VAT cases only, they should be directed to write to VWET using the online template or to by post to VWET, Alexander House, 4th Floor, 21 Victoria Avenue, Southend on Sea, SS99 1AA.

If a taxpayer or their authorised representative calls the DMB helpline and requests a ledger breakdown they will be advised to write in to VWET.

If a taxpayer writes into DMB requesting a breakdown, the correspondence should be forwarded to the VWET EF Tray (545 Enq- VWET Team Southend).

If the letter is in response to correspondence from the DTO regarding a debt or in response to a campaign letter the DTO should first answer those queries and advise the taxpayer that a breakdown will be sent on in due course. Capture your response to EF and forward with a note to VWET requesting a breakdown is also sent out.

In all contact with the taxpayer you should advise that if they have a debt HMRC will continue to take recovery action. Taxpayers and their representatives should also be advised that VWET will not discuss the debt, or debt collection processes with them.

VWET will not be responsible for taking any accounting adjustment work in relation to the debt or outstanding action required on the taxpayers account (e.g., lifting inhibits, etc).

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Requesting outstanding returns

When contact is made with the taxpayer, request any outstanding returns especially if the taxpayer wants to discuss time to pay. From April 2012 all VAT registered businesses are legally required to submit their VAT returns on line and pay electronically. If the taxpayer has any outstanding returns they should be told to submit them online. Taxpayers have the facility to submit all outstanding periods online. However they should be advised that missing periods will be displayed with the oldest first and care must be taken to submit the information appropriate to the return period. Failure to do so may result in additional penalties being charged.

Duplicate returns

Where a taxpayer is already mandated or for periods starting on or after 1 April 2012 duplicate paper returns should not be issued. The taxpayer must be advised to submit the returns online.

Although taxpayers now submitting online cannot themselves request a duplicate paper return, the facility to request one via VISION for such taxpayers still remains. Inadvertent requests by HMRC staff made through VISION would be rejected by the VAT mainframe, but the requestor would not be advised.

Deregistered taxpayers

In the case of deregistered taxpayer if they were mandated and enrolled for online services before the VAT 30 (Deregistration) is input they must submit the returns online.

However if the taxpayer was mandated but failed to enrol before the input of the VAT 30 this removes their facility to file online. If they had not previously submitted their returns online and their deregistration indicator is set on VISION and the R1 screen shows an EDD (Effective Date of Deregistration) they will be unable to register for online filing. This is because the registration process asks them for answers to five questions and their deregistered status makes it impossible to answer two of them.

In this case a workaround has been put in place by the VAT Online Helpdesk.

The Helpdesk telephone number can be given to any taxpayer who cannot successfully negotiate the registration process for online filing because they are deregistered for VAT.

You should give the taxpayer the phone number for the VAT Online Helpdesk (0300 200 3701). The helpdesk can temporarily make an amendment to VISION that allows these taxpayers to successfully answer all five questions. This ultimately means they can submit their final return or indeed any other outstanding returns online.

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Time Limits

There are time limits regarding repayments under Section 80 of the VAT Act 1994. If the taxpayer has already made payment on assessment, they may not receive back all monies that have been overpaid - see VAT Refunds Manual VR7510.

The time limit for making claims was increased from 1 April 2009 from 3 years to 4 years. However in order to ensure that accounting periods that were out of time on 31 March 2009 are not brought back into time by the change, transitional arrangements were made - see VR2820.

Section 80 of the VAT Act 1994 only applies in those cases where an actual payment has been made to the commissioners and the taxpayer is claiming that some or all of that payment was not VAT due. It applies only to amounts overpaid to HMRC in relation to over declared output tax and not where repayment returns are concerned.

Section 80 applies as follows:

See VR7520 where the VAT return declared liability accepted by HMRC is less than the assessed amount.

Where a business has paid a prime or additional assessment which is higher than the accepted VAT return declared liability for a given accounting period.

The recovery of the excess amount will be capped by Section 80(4)(a) of the VAT Act 1994 if more than four years have passed since the end of the accounting period in which the assessment was made, see VR2830 for further guidance on time limits.

Payment returns where the VAT return declared liability accepted by HMRC is greater than the assessed amount see VR7530.

If a return is submitted more than four years after the end of the accounting period in which a centrally issued assessment was made, and that return shows a net payment due to HMRC which exceeds the amount paid on the assessment.

The return and any payment of the balance due should be accepted or enforced in line with normal procedures.

Where the Vat return declared liability accepted by HMRC is a repayment return see VR7540.

Where no central assessment was issued, if a late return shows a net repayment due to the business, the return should, if agreed by HMRC, be accepted and the net amount claimed on the return should be repaid, subject to verification, adjustment or denial of a VAT credit as normal.

However, any assessed amount which was paid more than four years earlier should not be repaid because it is considered to be an overpayment by way of VAT which is capped under Section 80(4) of the VAT Act 1994, see VR2830 for guidance on time limits.