HMRC has identified an increasing risk of an error in the VAT returns for certain Franchised Dealerships, described as “Bumping”.
HMRC are sending letters to some motor retailers that they believe are at risk from ‘Bumping’.
Bumping is where there is a discrepancy between a vehicle sales invoice on the DMS system and the finance proposal one, which can lead to the underpayment of output VAT on the sale.
Most retailers have been aware of the issue for many years and have processes in place to avoid it happening, however, sometimes certain finance house systems can make this issue more pertinent.
The letter from HMRC offers step-by-step guidance to dealerships who they consider to be at most risk.
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle retailers in the UK said, “Not all motor retailers will receive a letter, as HMRC have informed NFDA that they are targeting their letters to businesses that are seen to be at the most risk.
“If you do receive a letter, or are concerned about the issue, please contact the NFDA helpline and we can offer advice and assistance on 01788 538 303.”
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