VAT Man on the Rampage

HMRC have announced that from 9 January 2013 they are embarking on a new campaign to chase up businesses that have one or more VAT returns outstanding. Their announcement reminds businesses that failure to submit a VAT return is an offence and penalties could be levied on top of any additional VAT that might be due to HMRC.

However, somewhat unhelpfully, they have also stated that detailed information about how they plan to approach this campaign is not going to be released until the date the campaign is launched!

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 9 January 2013 to avoid getting caught up in this campaign.

What if you cannot pay?

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

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

You will need to explain the circumstances why you are unable to make full payment and what steps you have 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 entertained on the condition that future returns are submitted and paid in full by the due date.

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.

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.

Next steps

Until we are made aware of precisely how HMRC plan to approach this campaign, it is difficult to provide specific advice other than to get the returns into HMRC before they contact the client.

31 January Filing Deadline Looms

A stark warning in the New Year for business owners, the self-employed and those with pensions or investment income.  If they don’t get their tax affairs into shape and submitted online by the end of this month, they will face heavy penalties from HM Revenue & Customs.

The deadline for filing paper assessments passed on October 31 so filing tax returns online by January 31 is the only option.

Under the self-assessment system, people who file their returns online after the expiry date will face minimum fines of £100 even if no tax is due. And those who still fail to file could rack up the fines to as much as £1300.

The longer people delay the more they will have to pay brought on by late-filing penalties after three, six and twelve months, as well as a daily penalty of £10 for each day the return remains late and the tax unpaid.

The advice is quite simple, make sure your tax affairs are in order and file the information on the HMRC website  by January 31, and don't forget to pay the tax that's due too.

It worries me that more people each year are choosing to ignore the deadlines and are being hit by what are very severe penalties.  Looking the other way as the deadline approaches could prove to be a costly mistake. The complicated fines framework is rigidly enforced and I can’t stress enough it is crucial for taxpayers to straighten out their paperwork quickly and submit their tax returns online.

If this is something that you require assistance with, please contact Steven on 0844 556 8674.