Those that fiddle their VAT returns are to be targeted by HM Revenue & Customs (HMRC). The new campaign will home in on individuals and firms who are trading above the VAT threshold but have not yet registered for VAT.
Currently, the threshold for VAT is £73,000 turnover on a rolling annual basis. In line with other tax campaigns by HMRC, the initiative is likely to invite people to voluntarily disclose their tax affairs in return for no or a lesser penalty. Those that do not choose to give up their information and start paying VAT that are caught after the campaign face being hit by a far heavier penalty.
Such campaigns have proven to be a success for HMRC, dragging back tens of millions of pounds in previously lost tax revenues by targetting offshore investments, medical professionals and people working in the plumbing industry. They have raised more than £500 million from voluntary disclosures and a further £100 million from follow-up activity.
“Each campaign is aimed at reducing the tax gap by focusing on areas where a significant underpayment has been identified,” said HMRC. “The department provides simple, straightforward opportunities for customers to put their records in order on the best possible terms, followed immediately by activity focused on the non-compliant who choose not to take up the opportunity.”
The campaign is to be officially launched later this summer.