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Following on from the article HMRC Targeted Campaigns Move On to VAT, the deadline for completing the Registration phase is 31 December. 

In July this year, HMRC launched its VAT Initiative in which rule-breakers were offered a special plan to put right their tax affairs. The chance to participate, and be guaranteed the conditions contained in the plan, ended on 30 September. 

Under the terms of the VAT Initiative, those who have notified their intention to take part must register for VAT by 31 December 2011. They will then receive their VAT registration number and instructions on how to complete their first VAT return. Once this has been submitted most will face a lower penalty rate of 10 per cent (or potentially even less) on the VAT that has been paid late. 

Since the opportunity ended, HMRC has been identifying those who did not come forward. Substantially higher penalties and even criminal prosecution could follow.

The VAT Initiative campaign focuses on businesses trading above the VAT registration threshold – for this year, an annual turnover of more than £73,000 – but who have not registered for VAT with HMRC.

As per TaxationWeb's previous article, Reminder VAT "Amnesty" Disclosure Deadline 30 September - Which Industries are being Targeted?  the trades affected include:

• construction
• business services
• hair and beauty
• hotels and catering
• retail distribution
• recreational services
•  motor vehicle distribution and repair
• sanitary and domestic services
• agriculture and horticulture
• property and
• road haulage. 

Marian Wilson, HMRC’s Head of Campaigns, said:

 “Those who have told us of their intention to disclose now have until the end of December to register for VAT. They must then submit their first VAT return and make arrangements to pay.

We are determined to ensure everyone pays their fair share and, since September, have begun identifying people and companies who we believe are trading above the VAT threshold but have not come forward. We will be targeting these groups early in the New Year.

I urge anyone with unpaid tax to use it to come forward and avoid potentially lengthy and costly investigations. The penalty they will pay will still be lower than when HMRC catches up with them.”

 You can let HMRC know of your intention to make a tax disclosure by contacting the department on 0845 600 5217, where a dedicated team is available to provide information and advice.

 Those coming forward are also invited to disclose any other tax arrears. Where they have to pay a penalty on undeclared tax other than VAT, this will be lower than the usual penalty of up to 100 per cent of the tax owed charged on those who fall outside this opportunity.

Although it is now too late to obtain the VAT Initiative terms, if businesses do still need to register for VAT, but didn’t make a notification, it may still be beneficial to do so before the VAT Initiative ends, as the penalty paid will still be lower than if HMRC approaches them first.

Businesses needing help can call HMRC on 0845 600 5217. Lines are open Monday to Friday, 8.00am to 4.00pm.