Taxation News

Businesses warned on late VAT returns

10th January 2013

As many as 50,000 businesses that have failed to submit VAT returns will be targeted by HMRC this month with warnings that their tax affairs will be closely scrutinised.

More than 600,000 businesses have to put in VAT returns each month and most do so on time. But in a new campaign some 50,000 will be warned that, from 28 February, their tax affairs will attract greater attention.

The VAT Outstanding Return campaign is aimed at businesses that have one or more VAT return outstanding, and have been told to submit their returns but have not done so. Some will have received an assessment of VAT for these periods.

These businesses are being given an opportunity to get up to date and pay the tax they owe by 28 February. After that, HMRC will target them and take a much closer look at their tax affairs. By using this campaign to come forward voluntarily, they might receive better terms, as any penalty they pay may be lower than if HMRC approaches them first.

People can take part in the campaign by:

  • Completing and paying any outstanding VAT returns immediately
  • Telling HMRC if they have stopped trading or have changed their business details

What to do?

The obvious answer is to get your outstanding VAT return(s) completed and submitted online as soon as possible and, preferably, before 28 February 2013 to avoid an HMRC enquiry into your business affairs.

What if you cannot pay?

Get the VAT return(s) completed and submitted anyway and, where possible, make whatever payment you can with the return.

Contact HMRC on 0845 302 1435 (Business Payment Support Service) or 0845 010 9000 (General Advice Line) to explain the return has been submitted (with part payment where appropriate) and ask about the possibility of negotiating a Time To Pay (TTP) arrangement.

HMRC’s agreement to a TTP arrangement is by no means guaranteed so you will need to be prepared to put forward a justifiable case for further deferral of payments, explaining the circumstances why full payment has not been made and what steps have been taken to find funding to meet the debt. You will also be expected to make a proposal of the timescale over which you will meet the full liability taking into account that any TTP arrangement will only be approved on the condition that future returns are submitted and paid in full by the due date.

Failure to submit a return or pay in full by the due date can result in a Default Surcharge ranging from 2% to 15% of the unpaid tax. However, worryingly in certain circumstances, HMRC might look to impose Civil Evasion Penalties.


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