Often we are contacted by an entrepreneur in distress. A huge VAT assessment has been send to him or her. Often EUR 5.000 plus about EUR 200 or EUR 300 fines.
Huge VAT assessment – what to do?
The moment we make inquiries it turns out this entrepreneur recently incorporated a BV company or registered a so called one man company with the Chambers of Commerce. Despite all the blue envelops send by the tax office, no Value Added Tax (VAT) return was filed. The tax office wants you to file these VAT returns and their method to make you file is simply send a huge VAT assessment to you and often that does indeed do the trick.
Blue envelopes – what is that about?
For us Dutch a blue envelope has the Pavlov effect of getting dry mouth instead of wet as we know it is a tax message. Non Dutch might not be that familiar with these blue envelopes and disregard them or think the content is not so important. We kindly request you to have this changed, as not responding to blue envelop content will create issues.
The tax office communicated to you the username (gebruikersnaam) and the password (wachtwoord), the deadlines to file which tax return. If the returns are not filed in time penalties are issued, if the returns are not paid in time, penalties are issued. Might sound childish, but very effective, maybe we are still like children.
Huge VAT assessment – how can Orange Tax Services assist?
We will investigate what is causing the assessment. Often that is indeed not filing the VAT return. The most common response is that nothing happened during that period, so please file nil. As much as we are tempted to follow that instruction, we still request for the bookkeeping. Not only to see if you paid costs with Dutch VAT that can be reclaimed. Indeed, even though you had not turnover, you can reclaim VAT on business costs.
But more importantly we want to get an impression about your bookkeeping. If you have not business bank account, or you do have one, but none of the share capital of the BV was deposited. You have issues to address. Or you did issue an invoice, but the invoice does not meet the invoice requirements. Or you did issue an invoice to another EU entrepreneur at 0% reverse charged VAT, but the VAT number of this other EU VAT entrepreneur was not mentioned on your invoice. In case of for instance UK companies, not all of them actually do have a VAT number. If no VAT number, no 0% VAT, then you need to charge 21% VAT.
In other words, we do a full check up, get you up to date and make sure in the future you do not miss deadlines. That is what you do with a huge VAT assessment.