HMRC Targets VAT Dodgers with Summer Amnesty
Over 40,000 businesses will be contacted through July and August as HM Revenue & Customs (HMRC) ask sole traders and small firms trading above the VAT threshold to register and pay their dues.
Known as the VAT Initiative, the latest campaign by HMRC allows businesses to make a voluntary disclosure of their VAT and pay back any tax owed with only a small penalty until 30 September. After this date, HMRC will launch their own investigations into any firms that have not come forward, with full penalties and charges in force.
Mike Wells, HMRC director of risk and intelligence, said:
“The aim is to make it easy for individuals and businesses to contact us, make a full disclosure of their income and face a reduced penalty.”
By law, businesses that turn over £73,000 (the current threshold) each year supplying goods or services in the UK or the rest of the European Union must register for VAT and send HMRC monthly returns and payments. These rules apply to anyone or any organisation HMRC sees as a business — this includes individuals, clubs and charities as well as partnerships and companies.
Different rules apply to those who trade worldwide or who deal only in non-VATable goods, such as equipment for people with disabilities. Although it is not a legal obligation, many businesses that turn over less than the current threshold also register for VAT out of choice as it can save them money.
To make use of the VAT Initiative businesses must register for VAT by 30 September and let HMRC know the amount of VAT it owes. By 31 December, the business must have paid the VAT and penalty, which under the scheme is only 10% of the amount of taxed owed.
“I urge people who have not registered their businesses for VAT to get in touch and get their tax affairs in order simply and on the best available terms.”