HMRC Target 40,000 Firms in VAT Crackdown

As part of a campaign at VAT rule-breakers, HM Revenue & Customs (HMRC) will be writing to over 40,000 individuals and businesses whom they suspect of trading above the VAT threshold of £73,000 turnover and who have not registered for VAT.

Under the terms of the letters, those who have not registered for VAT can come forward 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 VAT that has been paid late. They will also be invited to disclose 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 30 September, using information pulled together from different sources, HMRC intend to investigate those who have not come forward. Substantial penalties or even criminal prosecution could follow.

To use the VAT Initiative people and businesses must:

  • Register with HMRC by 30 September to “notify” that they plan to make a voluntary VAT disclosure;
  • Tell HMRC about VAT due and make arrangements to pay it, as well as any penalties due, by 31 December.

Our Tax Disputes professionals are available to give information and advice for businesses that wish to register for VAT and/or make an organised disclosure to HMRC. To contact one of our specialist VAT Lawyers please click here or call 0845 8622 529.

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