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Warning for VAT cheats
July 2011
We are advising businesses and individuals who have not fully disclosed VAT arrears to do so by 30th September or face substantial penalties.
A new campaign has been launched by HM Revenue & Customs (HMRC) to catch VAT rule-breakers. It focuses on individuals and businesses trading above the VAT threshold of £73,000 but who have not registered for VAT.
More than 40,000 letters will be sent out over the next few weeks informing businesses how to register to pay what they owe. Under the terms of the VAT initiative, those who have not registered to pay VAT can come forward at any time up to 30 September to tell HMRC that they want to take part. If they make a full disclosure, most face a low penalty rate of 10 per cent on the VAT that has been paid late.
Businesses will also be invited to pay any other tax arrears. Where they have to pay a penalty on undeclared tax other than VAT, this will be lower than the customary penalty of up to 100 per cent charged to those who fall outside the opportunity.
After 30th September, using information pulled together from different sources, HMRC will investigate those who have failed to come forward and substantial penalties or even criminal prosecution could follow.
Brent Goodwin, VAT Manager comments, "This latest crackdown by HM Revenue & Customs follows a similar pattern to the ‘amnesties’ recently offered to doctors, plumbers and holders of offshore bank accounts. The taxman is now more readily able to crosscheck a trader’s turnover to VAT registration records in order to identify those traders with sales in excess of, or just below, the limit of £73,000 who are not registered for VAT. Those that are not registered, in many cases for legitimate reasons, can expect one of these letters and should immediately seek professional guidance and advice."
Those seeking tax advice can contact Brent Goodwin at our Leicester head office on 0116 254 9262.