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VAT registration delays cause cashflow mayhem

Major delays in registration for VAT are causing many businesses significant cashflow problems.

In some cases, companies are waiting for six months or more for registration.

Paul Aplin, chairman of the Institute of Chartered Accountants Tax Faculty, said: ‘This problem has been getting worse for some months. The Revenue & Customs is aware of the difficulties but there is no end in sight at present.’

The latest research by the faculty shows that the delays in VAT registration are the most significant indirect tax problem faced by companies at present.

Smaller businesses are faced with cashflow problems because, without a VAT number, they have difficulty in getting their invoices paid.

Companies engaged in building work – such as an office extension or a refurbishment – will normally depend on VAT refunds being paid during the course of the project. Without a VAT registration, they will not be able to reclaim these contractor’s expenses.

This could seriously delay any rebuilding work.

In worst case examples, the solvency of some businesses could be in doubt.

The problem has been caused by the Revenue closing one market VAT office in Newry and a rapid increase in work caused by the changes in rules for managed service companies in the Budget. In addition, the tax authority is pumping resources into fighting fraud.

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