The taxman is gunning for traders who are declaring taxable income over the VAT threshold, but have not registered for VAT. Over the coming few weeks HM Revenue & Customs (HMRC) will be sending over 40,000 letters letters informing businesses how to register for VAT and how to pay what they owe.
The “VAT Initiative” targets individuals and businesses with a turnover above the VAT threshold (of £73,000) but who haven’t yet registered for VAT. The “VAT Initiative” campaign allows non-registrants to notify HMRC by 30 September that they want to take advantage of the scheme. Traders who notify and go on to make a full disclosure will qualify for the low penalty rate of 10% of the VAT that has been paid late. Crucially, they will also be told to disclose any other tax arrears as part of the VAT Initiative Disclosure process.
After 30 September HMRC intend using information from a number of different sources, to investigate those who did not notify their intention to disclose. Substantial penalties (up to 200% of the tax) or possibly criminal prosecution could follow.
To use the VAT Initiative traders and businesses must:
- Register to “notify” HMRC of their intention to make a full voluntary VAT disclosure by 30 September;
- Make a full voluntary disclosure of the VAT owing, and make arrangements to pay the VAT plus interest and penalties due, by 31 December.
Registering for VAT is the easy part. Traders will almost certainly need professional advice about their tax liabilities for earlier years: as the taxman can go back up to 20 years and charge interest plus up to 100% penalties on those arrears; and 200% where offshore bank accounts are also held.
How can Lynam Tax Investigation Experts help me?
Lynam Tax partners have a vast amount of practical experience in managing tax investigations and tax enquiries. We can advise you on the best course of action and if appropriate, help you manage any necessary disclosures, in order to obtain the optimum outcome for you, your business and your family.
*For a free, private, no obligation consultation, call Paul or Gemma Lynam today on 0845 643 9997