Businesses and individuals that are trading above the current VAT threshold but have not registered for VAT are being targeted in a HM Revenue & Customs campaign.
The current VAT threshold applies where turnover exceeds £73,000 and HMRC wants anyone trading above this and not yet VAT registered to come forward and make a voluntary disclosure before 30 September 2011.
Those who do so will be charged a reduced penalty of up to 10% on the VAT that has been paid late (rather than 100%) and will be expected to submit their first VAT return on time, including paying the tax due. They will also be offered help in disclosing any other tax arrears with the benefit of reduced penalties, if applicable, Mike Wells, HMRC director of risk and intelligence, said.
Once the 30 September deadline has passed, HMRC warned it would use information it holds, as well as third-party information and “web robot” software, to identify businesses and individuals that it would have expected to register for VAT during the campaign. “We will then start follow-up activities such as full enquiries and criminal investigations wherever possible,” Mr Wells said.
“This is not the first time that HMRC has attempted to raise monies from unpaid taxes with the aim of seeking full disclosures through the incentive of reduced penalties on any tax owed,” said Andrew Arnott, a partner at accountants Saffery Champness.
Any individual or business – including farmers, landowners or contractors – that is either trading at or above the VAT threshold, or is likely to exceed it, should take professional advice now, as should any business with undeclared tax, he said. “There may be ways to mitigate penalties if action is taken promptly.”
To date, HMRC has raised over £500m from voluntary disclosures and a further £100m from follow-up compliance activity.
More than 40,000 letters will be sent out over the next month as part of the VAT campaign, encouraging people to “pay what they owe”. To register or notify HMRC, contact the dedicated helpline, 0845 600 5217, or log on to www.hmrc.gov.uk/ris/vat. Anybody targeted by a previous campaign will not be able to use a subsequent campaign to disclose liabilities.