Register for VAT and take advantage of a lower penalty

VAT rule-breakers are urged to make a tax disclosure before 30 September if they wish to benefit from a discounted penalty rate

The new campaign focuses on individuals and businesses trading above the VAT registration threshold – a turnover of £73,000 – but who have not yet registered.

Target sectors include construction, business services, hair and beauty, hotels and catering, retail distribution, recreational services, motor vehicle distribution and repair, sanitary and domestic services, agriculture and horticulture, property and road haulage.

Why act now?

Under the terms of the VAT Initiative, those who have not registered to pay 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 will face a low penalty rate of 10 per cent on VAT that has been paid late.

After 30 September, using information pulled together from different sources, HMRC will investigate those who have failed to come forward. Substantial penalties and even criminal prosecution could follow.

How to tell HMRC

To use the VAT Initiative, 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

To let HMRC know of your intention to make a tax disclosure, you can:

Those coming forward are invited to also 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.