VAT threshold

[rapido]

Our business, currently under investigation, always traded below the VAT threshold. If we agree to a settlement, in the interests of drawing a long investigation to a close, it would imply a turnover above the threshold; would the VAT guys then come to us for alleged unpaid VAT?

[King_Maker]

Surely any settlement with HMRC would be on the basis of unpaid VAT for prior years?

Or have I missed the point of your question?

[pallet]

I think k m is right it is now HM. revenue and customs.but before any agreement make sure the HMRC are fully aware on what grounds you are going to settle.The reason for this is the vatman may come in 2 years time and tell you the vat was not investigated and therefore was not in the agreement.Everyone will tell you that they cannot, but as i have said many times the HMRC do not play to the rules.What it does mean is that you may now have to register for VAT. So always look carfully before taking a quick fix and check the side affects, good luck .

[Eamon McNicholas]

You need to be very sure of exactly what it is (and just as important what is not) covered by what HMRC want you to sign - they will be.

Regards,

Eamon McNicholas Esq.

http://www.EamonMcNicholas.com

[rapido]

Thank you for your help and comments so far, but perhaps the question may have been misunderstood; we weren't deliberately evading VAT, just trading below the threshold. However, the tax inspector seems to think we "should have" been turning over at least double what we declared, based on what "similar businesses" have done in the past, and this higher turnover would be way above the VAT threshold. We feel it would be adding insult to injury to have to pay alleged unpaid VAT as well as alleged unpaid tax, neither of which we actually owe, in truth.

[King_Maker]

Are you saying that the current investiagtion is for Income Tax, but you worried about being hit for VAT also?

If so, then Eamon McNicholas's post is very apposite.

What does your accountant have to say on the matter?

[pallet]

what I can not understand is why you are letting a hmit bully you. Ask which similar businesses they are baseing yours on.A stable yard charges £20, a similar £150, one full livery and one is DIY so do not give in to the bullies to easy, how can a HMIT tell you what your business is turning over. What they can say is similar turns over more as tesco does more than morrisons, and be careful as previous years may be affected by the quick fix, unless you have lied because that appears what the revenue are saying.If I called you I a liar, would you except it, NO so why except it from a hmit who is a public servant not GOD.

[Eamon McNicholas]

HMRC are one body covering both income/corporation tax and VAT. If they are suggesting your turnover was higher the tax consequences are liable to follow across the board.

When HMRC claim your turnover "should have" been higher what they really mean is that is was higher, just that they say you did not tell them. So they are talking about "similar businesses" because they do not believe your figures.

So it comes down to who is right and what evidence you or HMRC can produce to support your different standpoints.

This appears to be a serious matter and you are best off getting specific advice. As King_Maker says, what does your accountant have to say on this?

NB: This is a general response to a post and is not to be taken as nor relied upon as advice.

Regards,

Eamon McNicholas Esq.

http://www.EamonMcNicholas.com

[pallet]

I think the last post has put it politely, the revenue do not believe you, but at this point in my experience they look for you to get frigtened and wrigle(which all bullies enjoy)If you have not lied ask them for their evidence that gives them the right to call you a liar.Most T/Ps are not 100% that is why the revenue go on fishing trips. Tell your accountant to defend the accounts until you know where the revenue are coming from do not wrigle and give anything you do not have to as they will twist it.Always remember HMITs do not play fair and will use what ever you tell them against you, always find out what they have and only defend that point.

[rapido]

As we naively (OK, stupidly) thought our business and accounts were transparently simple, if a little unconventional, we didn't actually use an accountant as such, just a Tax Advisor to handle the tax side of things. This tax advisor is now vigorously defending our figures but so far the Inspector remains unimpressed. As it was entirely a cash business we have little in the way of proof, but then neither do they. They cannot point to an extravagant lifestyle or substantial assets to support their accusations, or suggest where all this missing money disappeared to (tens of thousands of pounds, in cash!). Anything we say in our defence only elicits the Mandy Rice-Davies answer: "Well you would say that, wouldn't you?"
Ironically, we don't actually mind paying Income Tax, we understand the need for it; we also understand the need for rigorous investigations to combat fraud, but there seems to be no provision for protecting the innocent.