Ok, so where were we?

To recap, I was registering a start-up business for VAT. The application was submitted online on the 4th of July. The application prompted a request for further information, the majority of which just does not apply to a home business. I replied to the answers and posted my blog on the subject towards the end of August.

• VAT Registration (Part 2)
• VAT Registration

The next contact I have with Customs & Excise consists of a business card put through my letterbox. A meeting hadn't been arranged with me. They had seemingly "given it a whirl" on the off chance I might be in.

I held the card in my hand thinking whether this was indeed a good use of tax payers money. It must have taken two staff a round trip of three hours to make the visit. That makes six hours or almost a day, which could have been avoided with a simple call beforehand.

My eyes linger on the card before I turn it over. There is a note on the reverse asking me to call. I do. A meeting is arranged for Tuesday, the following week, the 27th of September, at "morning".

I listen to James O'Brien on LBC while I wait. Occasionally, I look through the front window to see if anyone is there. Then I see a convertible pull up, park outside next doors, raise the roof, and two Customs Officers get out.

They explain that HMRC need to apply more detailed verification to businesses registering for VAT owing to abuse of the system, an abuse that has led to substantial losses for the UK exchequer. They are well mannered. I show them samples of some products I am looking to import from the Far East. One of them is a redesign of a popular Asian product I am planning to manufacture. They seem satisfied and exclaim, "you're obviously not the type of company we're looking for". All in all they stay about twenty minutes.

The application is referred back to the Registration Unit at Deansgate. I feel assured the VAT number will be issued, finally, after three months. Three weeks later, on the 23rd October, an HMRC brown envelope arrives through the letter box.

Instead of the expected VAT certificate there is an "Advice of Non-Registration". The letter says "for the time being you will not be registered". The letter contains a table of reasons an application cannot be processed.

There is an X against "Your application form has failed pre-registration checks, please contact the office for further information".

My first thought was of customer service. Wouldn't it have been helpful to include the "further information" with the letter? Instead, I have to write to them and request it, they will send it, then I have to respond to it and ask them to reconsider the application. Was this the most efficient or effective way to do this? If there had been other questions couldn't the visiting officers have asked them? I can foresee another six to eight weeks delay.

Interestingly this is the first letter, which doesn't give advice about invoicing. Previously you are reminded to add VAT to the sales price and tell the customer you will sort him out with a tax invoice later. Having done so, and being advised of non-registration, what do you now tell the customer? If you are appealing the decision do you still need to follow this process? My first thought was of customer service, but the letter offers no help.

To say I am baffled as to how a VAT application can take four months is an understatement. What can possibly take so long? Whatever it is, it can't be good news for UK entrepreneurs.

The unwieldly tool HMRC applies to combat fraud partly creates the problem they try to solve. In order to VAT register a company, businesses are being encouraged, or should I say being cornered into, buying already registered companies, which are dormant, or being liquidated or are worth nothing. Or they register companies with different trade classifications, such as a plumber, and then change the classification after being registered.

Where the alternative is to wait over four months for an application to be processed I can understand why business owners do this. Is it wrong? You know, I don't think it is anymore. Why should new, legitimate businesses in the UK be choked with red tape and be criminalized?

Was it really Tony Blair who said we ".. should receive, high quality service from the Government"?