Interest charged by revenue for VAT

[dingdong]

Hi

Just got a letter from revenue that they were charging 8500 euros interest for late payment of VAT.

My year end was 31/1207 - I was paying by direct debit -monthly which was 24,000 for the year , my vat liability was a 100,000 , i paid the 76,000 extra to my accountant who signed of account in may 08.

I did,nt think i did anthing wrong, it is a shame to give the revenue 8500 interest i believe for nothing. That is a heavy penalty it is more than 10% of what i owed, and most of i only collected in 11/12 month of 07

Is there anyway of arguing my case or getting not paying this.

Please help

 

[Joe1234]

Re: Interest chatged by revenue for VAT

When you realised that your VAT liability was likely to far exceed the amount you paid by direct debit (presumably).

Revenue are entitled to charge interest if the amount paid by DD is significantly under the total liability. In any event, your VAT return and payment would have been due on 19 February, so paying it in May would certainly make them more likely to charge interest.

 

[simplyjoe]

Yeah and I dont like having to pay the bank interest on my mortgage!! The rules are very straightforward. The vat was due on 19 January & the underpaid DD should have been identified earlier. Sounds like your information systems operate as slow as a German Centre Half. Submitting an 07 Annual VAT return in May is madness. Even when on an annual vat scheme your books should be completed every 2 months with a running total of your liability being maintained. Your slow accounts are costing you big time. Invest in improving your systems or continue to suffer unnecessary costs.

 

[ubiquitous]

Fwiw, this sort of issue is one of the main factors that Revenue use in selecting cases for Revenue Audit.

 

[KDA man]

Depending on how the interest was calculated, you may be over charged.

It is possible your DD was sufficient for most of the year, and as you said Nov/Dec 2007 could have been massive.

If this was the case, you should prepare accurate Vat3's for each VAT period, submit to the revenue and ask for a re-calculation.

Prior to doing this, request basis of calc from revenue.

However, you effectively owed the revenue 76k for 4 months. Interest will be substantial.

 

[Joe1234]

The vat was due on 19 January & the underpaid DD should have been identified earlier.

Sorry, I unintentionally misled the Op by stating 19 February. It should have been 19 January. I must go back to school to learn the months.

 

[The Intern]

If the total DD payments are less than 20% of the annual VAT liabilty, Revenue are entitled to run interest 6 months from the return's filing date (i.e. 19/01/08). Therefore they have probably started the interest clock from 19 August 2007.

It is very difficult to mitgage statutory interest. It would be worth carrying out an exercise as if you were submitting your VAT returns on bi-monthly basis and applying the interest rate (0.0032% per day) on this basis.

Unless you have had an exceptional year, you should increase your DD payments considerably and as a matter or urgency to avoid a repeat of same next year.

 

[simplyjoe]

Revenue are entitled to run interest 6 months from the return's filing date (i.e. 19/01/08). Therefore they have probably started the interest clock from 19 August 2007.

Actually 19 July. So six months to 19 January and 4 months to May - that is 10 months interest.
Your bookkeeping/accounts need to improve. A vat bill of €100,000 indicates a minimum turnover of €741K - possibly much higher. This level of T/O should justify you producing bi-monthly accounts with an exact vat liability. Anyway you would need bi-monthly accounts to manage a business with this level of turnover. Stop fire fighting start managing.