HMRC announce new VAT campaign

January 7, 2013


North east businesses that have fallen behind with their VAT payments could soon find themselves facing an investigation by the taxman.

HM Revenue & Customs (HMRC) has announced that from tomorrow (9 January), they are embarking on a new campaign to chase up businesses that have one or more VAT returns outstanding.

Their announcement highlighted the penalties could be levied on top of any additional VAT that might be due to HMRC if businesses fail to submit a VAT return.

Full details of how the campaign will work have yet to be released, but Anthony Andreasen, Head of Tax at RMT Accountants & Business Advisors, is recommending that anyone in danger of falling under the spotlight should move quickly to minimise the problems they might face.

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, and in certain circumstances, HMRC might also look to impose Civil Evasion Penalties.

Anthony Andreasen says: “The obvious answer is to get any outstanding VAT returns completed and submitted online as soon as possible, preferably before 9 January in order to avoid getting caught up in this campaign.

“Making full payment of their arrears clearly isn’t going to be an option for a high proportion of the businesses that have got themselves into such difficulties, but even if this is the case, these businesses should still get their outstanding VAT returns submitted as quickly as they can.

“HMRC has the right to close down businesses that haven’t made the necessary Crown payments, so making at least a part payment of what they owe if it’s at all possible will show that companies are doing their best to resolve the situation.”

HMRC has been operating the Business Payment Support Service, or ‘Time To Pay’ scheme, since late 2008 to allow companies to agree a delayed payment schedule for their Crown payments, such as PAYE, National Insurance and VAT, and thus improve their cashflow and help them stave off the full impact of the recession.

Many thousands of north east firms have already taken advantage of the scheme, and those that are currently unable to pay their VAT arrears can still apply for a Time To Pay (TTP) arrangement, although there is no guarantee that one will be granted.

Anthony Andreasen is advising business owners to prepare themselves thoroughly for the questions they will be asked when applying for a TTP arrangement to give themselves the best possible chance of success.

He continues: “Any business owners wanting to secure further breathing space will need to explain why they are unable to make full payment and what steps they have taken to find funding to meet the debt.

“They will also be expected to propose a timescale over which the full liability will be met, taking into account that any TTP arrangement will only be granted on the condition that future returns are submitted and paid in full and on time.

“With the Government focused on bringing in as much tax revenue as possible to increase the amount coming into the Treasury, HMRC will be executing this campaign with a great deal of vigour, and not being properly prepared for what this might entail could end up costing business owners a great deal of time and money.”

RMT provides the full range of financial and business advisory services through its Specialist Tax, Recovery & Insolvency, Corporate Finance and Medical divisions.  For more information, please contact one of our tax team


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