VAT repayment notice updated to reflect cheque withdrawal

HMRC has updated VAT Notice 700/58: treatment of VAT repayment returns to confirm when a repayment return is recorded as being received, as HMRC plans to phase out government cheques for VAT refunds

Once a VAT repayment has been completed and submitted it will go through the following process:

  1. The computer system will record the date the return is submitted through the online account. If a taxpayer has been approved to submit paper returns the date HMRC receive the return will be recorded on the computer system.
  2. Automated credibility checks - These tests are applied to all claims. The majority of returns pass these tests and proceed immediately for payment.
  3. Credibility queries - Returns that fail the automated tests are checked manually and are either resolved by the credibility team, or sent to specialist officers that deal with VAT for further investigation.
  4. Returns sent for further checks - High priority is given to these checks and any queries are answered with the minimum involvement or inconvenience to the business.
  5. Credibility queries returned to the credibility team - Results of VAT officer action, including amendments, are returned with a certificate detailing the amount of time taken and any official delay. Claims are passed for payment.
  6. Payment of the claim - Once a claim has been accepted, repayment is made by direct payment to the bank. HMRC’s computer checks whether repayment supplement is applicable and if it is, the supplement is paid automatically at the same time as the repayment.

HMRC is looking to phase out repayments of VAT by payable order (government cheques) due to them being untraceable, with refunds to be straight directly into bank accounts.

Each month hundreds of payable orders issue to VAT payers are returned to HMRC undelivered, which suggests that the businesses and individuals cannot then be traced. Businesses and individuals will need to provide HMRC with a sort code and account number using the VAT online service.

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