Time is running out to take advantage of the HM Revenue and Customs (HMRC) VAT Initiative Campaign. Businesses have until the end of September to notify HMRC that they should have registered for VAT before now.
Quoting from HMRC’s own web-page -
“You can take advantage of this opportunity and tell HMRC about when you should have been VAT registered and also declare any income that you haven’t previously told them about which may relate to other taxes.
If you act now, you can take advantage of lower penalties offered for prompt action. In some cases, you may not have to pay any penalty at all. Even if you do have to pay a penalty, it will be a much lower one than it would be if HMRC has to enforce your
registration or if you delay in coming forward. If you cannot afford to pay what you owe in one lump sum, don’t worry. If your
circumstances warrant it, you may be able to spread payments…………………….If you decide to take advantage of this initiative you will be able to stop worrying about what might happen if HMRC finds out that you’ve not been telling them about all of your income. If you send in your VAT registration form within 12 months of the date you should have been VAT registered, you won’t be charged a penalty unless you knew you should have been registered but chose not to. If you should have been registered before then, you will be charged 10 per cent of the net tax due to HMRC. However, if you knew you should have been registered, but decided not to, the penalty will be higher.
It’s a chance to start getting things right from now on, whilst knowing exactly how much it’s going to cost to sort out things for the past. It’s basically a ‘fresh start’.”
In our opinion, this is a good opportunity. Like all recent HMRC initiatives, it contains a thinly veiled threat to businesses that choose to ignore the offer. We have seen recent examples of strong action against tax avoiders with plumbers (who were recently offered a similar initiative) being arrested for not declaring income.
Of course, any back-dated VAT liability will have to be paid. Please contact us if you need further advice.