How to deal with situations affecting reasonable enquiry time
It is important that all actions taken to verify a claim are carried out as quickly as possible and an up to date audit trail of all relevant documents and actions recorded on Electronic Folder. This information may be needed where we have refused payment of repayment supplement and the trader appeals to a tribunal.
The following are examples to help your decision making
1. Several unsuccessful attempts are made to contact the trader by telephone
You should send a letter to the trader as soon as it becomes apparent that the trader cannot be reached by telephone. Your letter must state that the repayment is being withheld and you should
- confirm why the repayment is being withheld,
- confirm that the repayment will not be authorised until we have fully verified it, and
- request a response within 10 days from the day after the date of the letter.
You should stop the repayment supplement clock and start to count reasonable enquiry time from 2 days after the letter is sent.
If the trader fails to respond to your letter within 10 days, you should consider taking the action set out in example 2 below.
2. You are unsuccessful in commencing the enquiry because the trader has failed to respond to your telephone calls and letters
Consider disallowing the input tax in accordance with the guidance in VSME28000.
3. You telephone the trader’s premises but the appropriate person is unavailable and you leave a message asking them to call you
You should not stop the repayment supplement clock when the message is left, because it does not count as initial contact; you cannot be sure that the message will reach the intended recipient.
Make sure, however, that you record the action you have taken and the name of the person you left the message with. You must tell the person you speak to how important the call is and ask that the appropriate person calls you back within 2 days.
If after 2 days you have not received a reply you should call again. If the person you need to speak to is still unavailable you must put your request in writing taking the action set out in example 1 above. If the trader does not respond to your letter within the timescales set out in example 1 above you should consider taking the action set out in example 2 above.
4. The trader is contacted and asks for the visit to be postponed until a more convenient time (for example, two weeks later)
You should stop the repayment supplement clock when the trader is first contacted - in this example the delay has been requested by the trader. You should make it clear that the repayment return is being withheld until the visit can take place and the return can be verified.
You should confirm in writing that the visit has been rearranged as per the trader’s request. Your letter should confirm the date of the visit and that the repayment will not be authorised until all enquiries have been completed and the return has been fully verified.
5. The trader is contacted and asks for the visit to take place very quickly, but you cannot accommodate this
When first contact is established, and the reason for the enquiry and list of information you need to see has been made clear, the repayment supplement clock is stopped. The trader may request the visit to take place very quickly, for example on the same day or within the next couple of days. Every effort should be made to accommodate the request. If, for example, a shortage in resources means the trader’s request cannot be accommodated for more than 7 days, this may be considered HMRC delay and so the repayment supplement clock should continue until the visit takes place, unless other enquiries are actively being pursued at the time. The trader shouldn’t be penalised for HMRC’s lack of resources. You should keep an audit trail of the efforts made to accommodate the trader’s request.
6. A visit takes place but the trader delays producing the necessary evidence to support the claim
Deadlines by which information is expected should always be given to the trader during the visit.
You should contact the trader promptly and within 2 days of the deadline to check on progress and record details every time you make contact and receive any response. The repayment supplement clock will be stopped (apart from any HMRC delay) from the date of first contact until the person conducting the enquiries is satisfied that a complete answer has been received.
7. The visit takes place but it is necessary to ask a policy team for advice before you can be satisfied with the validity of the claim, or
The visit takes place but it is necessary to contact another officer or trader to verify the evidence supplied
The repayment supplement clock should be stopped on the date of first contact with the trader, and should not be re-started while advice is sought or enquiries are made both within and outside HMRC, see VATRS10230.
You should explain the situation to the trader in writing. Your letter must state that the repayment is being withheld and that it will not be authorised until it has been fully verified. You should set a reasonable deadline for the enquiry to verify the evidence to be resolved and then liaise with the Policy team, officer or trader dealing with your enquiry to make sure that it is dealt with promptly. It is important to ensure the team or officer dealing with your enquiry is aware of the potential consequences of any delay in answering your enquiry. It is reasonable to expect that you will set a 14 day deadline for a reply and follow up enquiry with any HMRC officer or team just as you would do with the trader.
The clock will restart when the complete answer to the query is received back by the person conducting the enquiries into the return or claim, and that person is satisfied with the answer. Any Departmental delays (such as delays in resolving enquiries internally) cannot be included in the total enquiry time. You must quantify any Departmental delays when you close the case.
8. The trader supplies the information requested but it is complex and takes some days to review
As explained at VATRS10230, we are allowed reasonable enquiry time to continue until we are satisfied we have a complete answer to our enquiries. Therefore a reasonable number of days taken to review the information supplied may be recorded as reasonable enquiry time, provided that the case is being actively worked on each day. The number of days depends upon the amount and complexity of the information received in response to the enquiry and there is an expectation that the case will be actively worked.
9. During the verification of a queried repayment return further returns are also queried
Any subsequent repayment return received after a repayment credibility enquiry has been started must be dealt with separately. If an enquiry is needed to verify a subsequent return you must again tell the trader that the return is being withheld and will not be authorised until you have verified it.
If a visit has already been arranged, you should tell the trader that both/all the returns will be verified on the visit. You can then start to deduct days for reasonable enquiries on the newly notified returns and stop the repayment supplement clock in respect of the subsequent return(s).
Note: If subsequent returns are not examined, the repayment supplement clock cannot be stopped.
You should then either approve the subsequent return or make further enquiries. If you decide that the subsequent return can be approved, this action must be taken immediately rather than waiting for the outstanding pre-repayment credibility query to be resolved. Failure to do this could attract a liability to repayment supplement.
10. There is information available to verify the return without the need to contact the trader
You should not stop the repayment supplement clock.
11. Before the pre-repayment credibility query is raised the period in question has been examined during an assurance visit
You should not stop the repayment supplement clock because the query could be answered by information already available within HMRC.
12. The local office decides to approve the return straight away and verify it later, because a visit has already been arranged for the near future
You should not stop the clock because no contact has been made with the trader about the return.
13. The local office contacts the trader and arranges a visit for a date in the future (for example, in 4 weeks’ time). The local office then decides to approve the return straight away
You should not stop the clock because no further information has been obtained as a result of contacting the trader.