HMRC have recently announced the VAT initiative campaign which is an opportunity for businesses to tell HMRC that they should be registered for VAT. This should happen between now and 30 September. The VAT initiative campaign is aimed at businesses that:
- have already passed, or are expecting to pass within the next 30 days, the current VAT threshold of £73,000
- have passed the VAT threshold in a previous 12 month period but did not register for VAT
- would like HMRC help to register now
- want to take advantage of a reduced penalty
Should I be registered?
You must register for VAT if any of the following applies:
- your VAT taxable turnover for the previous 12 months is more than £73,000 (the current VAT registration threshold)
- you think your VAT taxable turnover will exceed the threshold in the next 30 days
- you exceeded a VAT threshold at an earlier point in time and have not registered for VAT
- you take over a VAT-registered business as a going concern
It is an offence to not register for VAT when you have exceeded the threshold and there may be penalty charges in addition to the VAT due. By telling HMRC voluntarily under the VAT Initiative before 30 September, you will incur a lower penalty than if HMRC have to enforce your registration and in some cases, there will be no penalty charge at all. You may also be able to spread the length of time over which you have to pay HMRC rather than paying in one lump sum.
Who cannot take part in the VAT Initiative?
You will not be eligible to take part in the campaign if:
- Your tax affairs are already under investigation (whether civil or criminal). You should tell the HMRC officer dealing with your check that you want to make a disclosure. A full and early disclosure may reduce the amount of any penalty HMRC charge
- If you have already made a disclosure under any of the earlier HMRC campaigns you won’t be eligible to disclose under this campaign.
You can find out if you could have disclosed under a one of the previous HMRC campaigns - for example plumbers tax safe plan - but failed to do so, on the HMRC website.
What do I need to do?
30 September is the last day which you can notify HMRC that you wish to take part in the initiative. You will need to complete the VAT initiative notification form and send it to HMRC.
If your notification is accepted HMRC will send you an acknowledgement and a Notification Reference Number (NRN). Please state on the notification form if you want HMRC to send you a VAT registration form (VAT1). Alternatively, you can download a form VAT1 but you should not send it to HMRC until you have received your NRN.
You will need to complete the VAT1 and return it to HMRC by 31 December, making sure you enter your NRN in the top right hand corner of the form. You cannot register online if you wish to take part in the VAT Initiative.
What if I decide not to notify - even though I should be registered for VAT?
In preparation for the launch of the VAT Initiative HMRC has been looking at information they already hold about taxpayers and their income. When the deadline for notifying has passed, HMRC will compare this information which they already hold with the details that customers have shown on their tax returns.
Where HMRC thinks that someone should have registered for VAT, they will compare information from various sources and will target the customers who they think should be registered, but who have not told HMRC they want to take part in this initiative. HMRC will carry out checks into their tax affairs or use their legal powers to get detailed information about their financial affairs and other undeclared income.
Those businesses that are found to owe additional tax will be charged higher penalties than those offered under the campaign and HMRC can charge penalties of up to 100 per cent of the additional tax.
If you are unsure of whether you should have registered for VAT, and would like assistance then please contact us at Edwin Smith.
