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Disaggregation Notice Served by HMRC - £50,000 saving

Our client

Our client had been served with a disaggregation notice from HMRC, along with a demand for the repayment of £50,000 in unpaid VAT. Disaggregation notices are issued when HMRC believes that a business has been split into multiple set-ups to avoid paying the proper amount of VAT – this is a very serious allegation

When HMRC visited the VAT registered business they had taken the view that a non-VAT registered business, set up by an individual involved in the main business, had been artificially separated.

Our advice

Our team of VAT specialists looked into the HMRC findings and discovered that the four-year cap was ignored. The four-year cap is a period of time given either after the prescribed accounting period or the due date for the return that allows VAT errors to be rectified. This action is only usually instigated when serious fraud has taken place. Also, a disaggregation notice only takes effect on supplies 30 days after the date on which it is issued, meaning that prior to this date - when two businesses existed - one was not liable to HMRC registration, resulting in the assessment being withdrawn.

Following our intervention, HMRC accepted their assessment was incorrect and withdrew from proceedings, saving our client from paying £50,000.


Contact us today

If you have been given a disaggregation notice by HMRC, or simply want to find out more about them and their potential implications, contact The VAT People for free on 0161 477 6600. Alternatively, fill out an online enquiry form and we will be in touch.

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