How to work pre-credibility checks to avoid repayment supplement
Most enquiries into VAT repayment returns will be made as a result of the pre-repayment credibility system. This page deals with those aspects of the credibility process that may impact on repayment supplement
1. Pre-repayment credibility queries are generated by the TRUCE Workbench system and a link is captured into Electronic Folder (EF) and indexed as UCRE. RIS OPS central credibility teams will seek to resolve the query by using information held in EF. In these circumstances the return will be approved centrally, otherwise the TRUCE Workbench case will be sent to the appropriate TRUCE in-box and the UCRE will be sent to the appropriate EF in-tray. Pre-repayment credibility queries referred out to local offices for further investigation are indexed in EF as UCRE.
2. You must use EF to keep an audit trail of all actions while dealing with the claim. TRUCE also has a history of its movements of a case. You should keep a record of receipt, progress and return of the pre-repayment credibility as EF is unable to carry out this monitoring function. Your records together with other evidence will be vital if, at a later date, the trader makes a formal request for repayment supplement or the case goes before a tribunal.
3. Carefully consider the pre-repayment credibility query as soon as possible after it is received and decide whether or not it can be resolved from information held in EF. To avoid a liability to repayment supplement you must make sure that these queries are investigated promptly and a response sent by the date specified.
You may be able to stop the repayment supplement clock if the query can be resolved without contacting the trader but see VATRS10230 for further detail.
4. If you need to contact the trader you must make initial contact as soon as possible and in any event before the date specified. It is important that you explain the reason for contacting the trader.
You should ensure that any requests to the trader for information are followed up regularly, no later than 14 days where an initial request has been made or a further 10 days where a reminder has been issued by post. Where a response is received, this should be reviewed as soon as possible; you should not, for example, wait for any ‘B/F’ period to expire.
5. If you need to contact the trader to arrange a visit, do so as soon as possible, unless you think that it will severely prejudice the verification (for example, where a criminal investigation is being carried out). You should always explain to the trader that the visit relates to an unpaid claim that will be withheld until it has been verified. You should also tell the trader which books and records you will need to see during the visit.
You should then confirm the date and time of your visit in writing. Your letter must refer specifically to the repayment being withheld and you should tell the trader
- why the repayment is being withheld,
- that the repayment will not be authorised until we have fully verified it, and
- the records and accounts you will need to look at on your visit.
If you have difficulty arranging a visit you must write to the trader as soon as you find that they cannot be contacted by telephone. You must explain that you have been unable to contact them by telephone and send your letter. 2 days after the letter is sent is then considered to be the start date of reasonable enquiries for repayment supplement purposes.
You must make sure that you follow up your letter if you have not received a response from the trader after 14 days (it is advisable to put a deadline in the letter)
6. You must make sure you record full details of the enquiries in your record (see 2 above). In particular you should record the date you first make contact with the trader. You can normally use this date as the first day that the repayment supplement clock stops.
You should not stop the repayment supplement clock for days lost in unsuccessful attempts to contact the trader by telephone.
7. Make sure you enter the correct date of first contact on the pre-repayment credibility query (UCRE) and the visit report. If you believe that direct contact with the trader could prejudice verification of the return, report the circumstances in EF and record the date you began enquiries.
8. Departmental delays cannot be included in deductible enquiry time. Instances of Departmental delay must be quantified and recorded in the pre-repayment credibility query (UCRE) in EF.
9. Make sure that appropriate credibility checks have been carried out for all relevant periods and the appropriate date(s) of first and all subsequent contacts are noted on the pre-repayment credibility query. When closing the case, an accurate number of days deductible for HMRC reasonable enquiry time must be entered on the TRUCE Workbench system and on the secure note attached to the UCRE. You should ensure that the pre-repayment credibility query is approved by an Authorising Officer both on TRUCE Workbench and EF. Approval of the case on TRUCE Workbench by the Senior Officer will enable the case to be released and included for repayment through the VOPS240 authority for the repayment run. The VOPS240 has been accepted by tribunals as the written instruction directing the making of the payment.
10. Thorough verification of repayment claims is critical in order to protect the revenue. You must not let repayment supplement related time constraints influence your action in fully verifying a claim. You must nevertheless be aware throughout the verification process that unjustified delays cannot be counted when determining the time taken for reasonable enquiries.
You must also make sure that adequate systems are in place to record all the action taken and the time involved in verifying a claim. This information may be crucial if, for example, a tribunal is asked to consider our refusal to award repayment supplement.
- Suspended returns - TRUCE workbench risk assesses every return independently and will choose to pay or query the return based on that risk assessment.
A return received after a pre-repayment credibility enquiry has been started must therefore be dealt with separately.
Time excluded for enquiries on one return cannot be carried forward to a subsequent return. You must process subsequent return(s) independently of any on-going pre-payment credibility queries.
12. Inhibiting repayments - A repayment inhibit can be set to prevent credits from being released to the trader. They also trigger pre-repayment credibility queries when a repayment return is received.
An inappropriate repayment inhibit could delay payment of a repayment return and result in HMRC becoming liable to repayment supplement. In order to avoid this happening repayment inhibits must be continuously reviewed and removed if they are no longer appropriate.