Chasing VAT Debts: Does HMRC now have new powers with international reach?


HMRC VAT Debt Collection Letter

I wanted to share a paragraph from a recent letter from HMRC Debt Management ‘National Non-Resident Recovery’ to get your thoughts.

A US business which is VAT registered has been assessed for output VAT; the business has made various overtures to HMRC about the assessment and payment for about a year but has never come to any mutually agreeable position with HMRC.

What is interesting is that HMRC is threatening to collect the debt by using US debt recovery procedures.

Has anyone encountered this before and does anyone know whether this threat is followed through?

The amount of VAT is not very big (about £60k) and HMRC would have a windfall if it was collected (there has been no loss to HMRC or the taxpayer in the rather unusual circumstances of the assessment).

Here is a the relevant extract from the letter:

“ If you do not pay by xxxx 2015, we may ask the competent authority in America to collect payment from you using their usual national debt recovery procedures. This means that you will have to communicate with them direct about this debt”