HMRC launch new Vat Outstanding Returns Campaign.
For those of you registered for Vat, but who have fallen behind on making your returns, HMRC have announced a new scheme.
For those of you registered for Vat, but who have fallen behind on making your returns, HMRC have announced a new scheme. The Vat Outstanding Returns Campaign runs until the 28th February 2013. In order to avail of the more favourable settlement terms on offer through the scheme, you must complete and submit all outstanding Vat returns by that date. This includes paying any outstanding Vat owing.
Since April all UK businesses are required to submit their VAT returns online, unless you are involved in insolvency procedures, or are part of a religious order whose beliefs prevent you from using computers! If you are behind on completing your online Vat returns and would like more information on how to do so, click here.
If the reason you have not made Vat returns is that you are no longer trading, you must inform HMRC of this change. Until you de-register for Vat, you are obliged to make Vat returns. You can cancel your registration for Vat online. There are other reasons why you may feel you are no longer liable to make Vat returns, such as having sold your business or a change in the nature of your business, but you are still required to inform Revenue and cancel your Vat registration. To make sure you avoid penalties, de-registering for Vat should occur within 30 days of the change in your business or ceasing trading.
If you avail of the scheme, outstanding Vat owing may still be liable to a default surcharge and/or penalties. HMRC are promising more favourable terms to those who participate in the scheme and bring their Vat affairs up to date before the 28th February 2013.
As to those who don't settle their outstanding Vat returns before the 28th February, HMRC have stated that "your tax affairs will receive closer attention". After February, Revenue will be targeting businesses who are behind on their returns. Those with Vat outstanding will face higher penalties and possible criminal prosecution. You should be aware that in cases where a return has not been submitted, but HMRC feel Vat is owing, they will estimate what you owe themselves. This may lead to some owing more in Vat than they would have if they had made the return in the first place. Another point worth noting is that in the case of Vat investigations, Revenue can go back through 20 years of a business' records to recover any Vat owing.
The last 2 years has seen HMRC chasing Vat owing with a renewed vigour! This is most likely due to businesses trying to reduce their Vat liabilities after the change in Vat rate back in January 2011 from 17.5% to 20%. In 2009/10 Vat investigations by HMRC recovered £443 million. In 2010/11 the figure recovered trebled to £1.34 billion, with an increase of 42% in the number of UK businesses being investigated for Vat fraud.
For more information on Vat returns and The Vat Outstanding Returns Scheme, click here.