Thursday, May 26, 2011

HMRC targets VAT cheats - or rather, it will do soon...

At last HMRC have decided to take advice BEFORE they announce a new plan to crack down on tax evasion.

Previous campaigns have targeted offshore investments, medical professionals, the restaurant trade and people working in the plumbing industry. In the latter case though, anyone could take the opportunity to 'come clean' under the terms offered by HMRC.

The latest initiative will focus on those individuals and businesses who are trading above the VAT threshold (£73,000) but who have not yet registered for VAT. It is likely to start "late summer".

This time around HMRC's initial announcement is simply that they are holding talks with interested parties. These will include the accountancy and tax professional bodies which have all been critical of elements of previous initiatives behind the scenes. This is implicitly accepted in HMRC's press release which states that:
“Our aim is to get as much input as possible into our future campaigns so that the views and experience of people and organisations outside the department play a fuller part in what we design for customers."
In due course, this VAT related campaign is likely to offer taxpayers simple, straightforward opportunities to put their records in order on favourable terms. As previously noted on this blog though the focus is on capping the penalties payable. All tax and interest on late paid tax is always collected.

After the 'amnesty' period HMRC activity will focus on the non-compliant who choose not to take up the opportunity. HMRC typically use new technology and legislation to gather and analyse data, from internal and external sources, to identify people who should come forward. This has provided thousands more investigations, now being worked through, including a number of criminal investigations.

If you regularly report turnover figures just below the threshold - watch out! You may genuinely manage your business to avoid the need to register for VAT, but HMRC will not know this. They suspect that plenty of people falsely report lower than true turnover figures and are pocketing the VAT they are charging illegally as they're not registered for VAT.

No comments:

Post a Comment