Busbys Chartered Accountants

Outstanding Vat return campaign

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 not specified exactly what they are going to do if VAT returns are behind, but they are threatening additional penalties if VAT returns continue to be filed late. These will be over and above the normal penalties that they can ordinarily impose. However, they have said that they will not be targeting businesses that are behind with the VAT returns until after 28 February 2013.

What to do?
The obvious answer is to get your outstanding VAT return(s) completed and submitted online as soon as possible to avoid getting caught up in this campaign.

What if you cannot pay?
You should still try to get the VAT returns completed and submitted anyway and, where possible, make whatever payment you can with the return.

If full payment is not possible, 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. Once a TTP agreement has been entered into, it is vital to ensure that payments promised are made on time. Otherwise the whole agreement can be voided.

Sadly, 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. If this is threatened, please contact us straight away – we can put you in touch with specialist VAT Consultants on the type of penalties that can be imposed.

Next steps
If you need any help with bringing your VAT returns up to date, please contact us urgently. Otherwise ensure that the person who is responsible for dealing with your VAT affairs is aware of this new campaign.

If you are contacted by HMRC, and they inform you that they are considering PN160 Civil Evasion procedures, it is vital that you contact us straight away!

VAT News Archive

If you have any queries regarding the above, please contact us on 01580 765088.
David Meredith • Carolyn Gore • Debbie Nelson-Gracie