HMRC’s VAT Initiative Campaign

HMRC have published detailed information on their plans to crack-down on individuals and businesses that are liable to register for VAT but have not done so. HMRC are in the process of sending some 40,000 letters informing certain businesses of the opportunity to register for VAT.

The VAT initiative campaign offers businesses the opportunity to inform HMRC that they should have been registered for VAT. The last day to notify HMRC of an intention to take part in the VAT initiative is 30 September 2011. The deadline for returning the completed VAT registration form (VAT1) to HMRC is 31 December 2011.

The campaign is aimed at businesses that have already passed, or are expecting to pass within the next 30 days, the current VAT threshold of £73,000 or who passed the VAT threshold in a previous 12 month period but did not register for VAT. 

Making a disclosure to HMRC as part of the VAT initiative campaign will allow businesses to take advantage of a reduced or nil penalties. Businesses that do not notify HMRC of their intention to use the current initiative will be charged higher penalties than those offered under the campaign. The penalties can be as high as 100% of the additional tax due and there is also the risk that HMRC may carry out a criminal investigation.

Once the time limit for the campaign has expired HMRC will focus on the non-compliant taxpayers who chose not to take up the opportunity to avail of the campaign.