On the 4th July I applied online for a VAT registration number for a small company. The company, a home business, is estimated to turnover no more than £75K.

In the application the activities of the business were described as "General trade of hardware and previously owned goods to end users and resellers."

The application prompted an enquiry for further information. Bearing in mind the size and scale of the business, the questions from the VAT office included (these were some of the best)

The process of starting a business is being stifled even further by having to wait in excess of three months for a company to be VAT registered. During that time you have to answer queries which can't be regarded as sensible and which could have been avoided with an effective risk based approach, an improved application form and some intelligence applied to the process. Instead, it seems as if every application is being treated as a fraudulent application.

In this example: the small company applies for registration on the 4th July. On the 26th August HMRC write to say it may take an additional 12 weeks, bringing total time taken to almost five months. During that time I have to increase my price to include VAT and tell customers I will sort them out with a tax invoice later. Incredible.

If you are registering a company for VAT in the UK be sure to factor in a considerable amount of idle time while you wait. In the meantime what can you expect? Well, HMRC ask you to add VAT to your sales price and tell your customer you'll sort him out later with a tax invoice.  

Yeah right! If your supplier asked you to do that what would you think? i know what I'd do if I was the customer.

What can possibly take so long? You're not likely to find out. HMRC, a public service body, instructs (their emphasis) "You should not contact either this office or the National Advice Service to see how your application is progressing. As you may appreciate, dealing with constant phone enquiries can further delay the processing time."

This letter, of course, isn't at all consistent with the information on the HMRC website. There in the FAQ's section under "When will I get my VAT registration number?" it says "...it may take up to 8 weeks to complete the registration process as we are now carrying out a wider range of checks on every application." and "We expect to be able to issue you with a VAT registraiton number in about 8 weeks but it may not take this long."

So riddle me this, Riddler: what on earth can take HMRC twenty weeks to process a VAT application which was correctly completed to start with?

The last word
Is it a solution to devise a system of controls, designed to prevent an abuse by a minority, and apply them indiscriminately to everyone? I like the story of the courageous retailer who successfully improved her business model by deciding to focus on selling to the majority rather than preventing theft by a minority. The change in focus, leading to tangible changes to the store layout and removing restrictions like the number of items a shopper could bring into the dressing room, led to strong retail sales growth without an increase in theft.

Even with our Government Think Tanks and the intelligence of many civil servants you would think a better solution could be devised, rather than a fix, which must naturally assume everyone a crook.