Help drafting a letter re VAT arrears

[HappyHippyChick]

Hi, I'm not sure I'm posting in the right section, but I was hoping some of you wise MNetters would be able to help me draft a letter to the VAT people regarding my husbands company (sorry I think it's going to be long!).

They have a large VAT arrears due to being rubbish at accounting during their first few years trading and growing very quickly. They met with someone from the VAT a few months ago, who agreed that they would be able to set up a repayment schedule rather than have to pay all the arrears off in one lump sum (they are unable to pay the whole amount in one go). At this time they also made a lump sum repayment (of about £15K I think).

After this meeting, they did not hear back about the repayment schedule and eventually contacted the VAT people again. They spoke to someone else who told them to concentrate on getting systems in place to keep up to date with their current VAT repayments, but also did not set up a repayment schedule.

They have now put in place things to ensure that their current VAT is paid, but still have done nothing about the outstanding arrears. They have recently received a letter from the VAT stating that as they haven't stuck to their repayment schedule the whole amount was now payable and if they didn't pay it then their assets would be seized. They don't have assets that are anywhere near enough to pay the VAT arrears so this would be pointless from the VAT peoples point of view, they would be better off setting up a repayment schedule as previously agreed.

The company could pay another lump sum of about £15K now and then pay off the outstanding arrears over a two year period so we need to write to them to explain the above and request that they set up a schedule as they agreed rather than close the company down. If anyone could help me draft a sensible sounding letter I would be sooo grateful.

Thanks to anyone who has managed to read to the end of this!

Dear Sir,

Ref; XXXXXX vat number (arrears)

At the meeting with you on x date , with xx person it was agreed that, after we had paid you a lump sum of £xxx we would be able to set up a repayment schedule to clear the oustanding balance.

As we had not heard from your office regarding this schedule by xxx date
we contacted your offices on xx date and spoke with xx. in order to arrange the repayment schedule, only to be told that we should concentrate on putting a system in place that would ensure that a similar situation could not occur in the future.

You have written to us stating that as we have not kept to 'the repayment schedule' you are asking for the sum total in 1 installment. However, despite
our having spoken with your office it would appear that there has been a breakdown in liason between the 2 of us and this has delayed the setting up of a repayment schedule. At the present we are unable to pay the full amount and can offer you a sum of £xxx on account followed by x amount of monthly payments of x. We trust that this will be satisfactory and enclose the said deposit of x and a copy of the order to our bank to pay the arrears by monthly direct debit.

Yours etc.

However, you knew that you should have been paying these arrears and there was nothing to stop you paying monthly amounts to HMCE. It is very odd that some one from the VAT section would tell you to concentrate on getting your systems in place to avoid this happening again and not start paying the arrears and IMO you are very naive in thinking this acceptable to HMCE. I trust you now have an accountant, or at least a competent book-keeper preparing your accounts so that this cannot happen again.

Thanks, yes now have a proper accountant and I agree that they should have made the payments and chased them up, they are useless at admin. I will be keeping a closer eye on them!