Debt and return pursuit: VAT: deregistered customers and revenue losses: redundant customers
A case will proceed to redundancy when
- a customer has deregistered
- all indicators have been cleared
- there is a nil balance on file.
This does not inhibit the subsequent submission of returns or the issue of officer’s assessments, but in both instances manual accounting and recovery procedures are required.
If a redundant customer debt arises after the computer has rejected a return , Accounting and Adjustments should notify the Banking VAT Reconciliation Team (EF folder - 566 REDUN) using a VCU 195 and check whether the payment has been received. If the payment has not been received, Accounting Adjustments will forward the VCU 195 to the relevant Debt Technical Office (DTO) for them to consider debt pursuit action.
If a redundant customer debt arises because an officer’s assessment has been raised the Banking VAT Reconciliation Team should be notified (ref VAEC3562 guidance). They will monitor for the payment and notify the local officer when it is received. If the payment has not been received after 30 days the Reconciliation Team will refer the debt to the DMB EEC Team via e-mail using the EEC referral form, for them to consider debt pursuit action. Local Officers will be notified of payment or non-payment/referral on a REC 545 form.
As all periods have been dropped from the computer, payments have to be accounted for manually. There may be unavoidable delays allocating payments sent direct to Banking, so before taking recovery action, phone the customer and Banking to confirm the debt is still unpaid.
Any payments received should be sent to the VAT Central Unit, Alexander House, 21 Victoria Avenue, Southend on Sea, Essex SS99 1BF with an accompanying VAT174 noted ‘redundant customer’. The form VAT174 is available on SEES.
A record of all payments from redundant customers is held by the Banking VAT Reconciliation Team in Alexander House,Southend.