Late VAT returns

Businesses warned on late VAT returns

As many as 50,000 businesses that have failed to submit VAT returns will be targeted by HMRC this month with warnings that their tax affairs will be closely scrutinised.

More than 600,000 businesses have to put in VAT returns each month and most do so on time. But in a new campaign some 50,000 will be warned that, from 28 February, their tax affairs will attract greater attention.

The VAT Outstanding Return campaign is aimed at businesses that have one or more VAT return outstanding, and have been told to submit their returns but have not done so. Some will have received an assessment of VAT for these periods.

These businesses are being given an opportunity to get up to date and pay the tax owed by 28 February. After that, HMRC will target them and take a much closer look at their tax affairs. By using this campaign to come forward voluntarily, they might receive better terms, as any penalty they pay may be lower than if HMRC comes to them first.

Marian Wilson, head of HMRC campaigns, said: 'If HMRC has sent you a VAT return and you have not yet taken any action, this campaign is a reminder to bring your tax affairs up to date. But time is running out.

'After 28 February, if they have not submitted their outstanding VAT returns and paid what they owe, HMRC will use its legal powers to pursue outstanding returns and any VAT that is unpaid. Penalties, or even criminal investigation, could follow.'

People can take part in the campaign by:

• Completing and paying any outstanding VAT returns immediately




• Telling HMRC if they have stopped trading or have changed their business details.

Further details are available from HMRC. Click HERE

VAT registration

HMRC has provided us with this article to explain the latest enhancement to its online VAT registration service for businesses and their agents.

The online tax registration service for Self Assessment (SA), Corporation Tax (CT) and PAYE for Employers has been available since 11 April 2012. On 31 October 2012 VAT was added to this service.

The service can be accessed direct from the HMRC website.

At the same time as VAT registration became part of the online tax registration service, HMRC introduced a new variations service. This means you can now do the following online:

• Register a client business for VAT
• Attach necessary documents, for example when applying for Group Registration (VAT Forms 50 and 51) or notifying of an Option To Tax (VAT 1614A)
• Carry out variations/make changes to some of the business VAT details (e.g. change the business name, but note that an agent cannot change the principal place of business or bank details on behalf of a client)
• Deregister online for VAT
• Apply for Annual Accounting or Flat Rate Scheme
• View and print the VAT certificate (if you have been authorised to act on behalf of your client for VAT using the Online Agent Authorisation service).
 

Note: If a client submits the VAT registration online itself, they will automatically be signed up to use the VAT Online service to file returns online. However, an agent completes the registration on behalf of a client, neither the business nor the agent is automatically enrolled for the online service and the agent or client will need to sign up as a separate process. This is to protect online security.

You can find out more about HMRC Online Services for Agents, including VAT Online,here.

You may be approached by a client to act as a ‘delegate’ and help them with their registration. If so, you will be able to review, add or amend the data prior to the client submitting the registration. Information does not have to be entered all at once as it can be saved and the application returned to for completion at a later date.

HMRC expect to process applications for registration four to six days faster than previously.

From April 2013, the HMRC systems and processes supporting VAT registration applications will be further enhanced. The time it then takes to issue a VAT Registration Number, for the majority of submissions received using the online service, will be reduced to three working days.

The online tax registration service does not replace the current agent authorisation process - the Online Agent Authorisation/64-8 process is unchanged.

To use the new variations service, access your client’s record as before and select the ‘Change registration details’ option. Note that you will need to activate the service before you can make changes on behalf of your client.

You can find more information about registering your client for business taxes, including VAT, using the link below.

How to register your client's business with HMRC

Just one final point of information. The maximum file size for any documents you wish to send in to HMRC, attached to an online application, is 5Mb. If you have something larger than this, then it will need to be posted and cross referred.

VAT REGISTRATION

HMRC has introduced a new way to register businesses for VAT.

It has also introduced a new variations service which mean a wealth of tasks can now be performed online.

They include being able to register for VAT, attach documents, such as the VAT 50 and VAT 51 forms or submitting notification of an option to tax (form VAT 1614A). Other elements include making changes to the principal place of business and contact details.

More details are available from HMRC.

VAT on goods stolen

Good news!

The case of PIGI - Pavleta Dimova ET v Direktor na Direktsia ‘Obzhalvane I upravlenie na izpalnenieto’ - Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite (Case C-550/11) has decided that if you have goods stolen from your business, you can still claim the VAT back on their purchase!

VAT defeat

HMRC has lost the latest leg of a long-running VAT battle with a five-a-side football pitch operator. The company Goals Soccer Centres is set for a £500,000 windfall in backdated tax payments, after judges overturned an original ruling that had considered block booking of five-a-side pitches for amateur football leagues should not be exempt from VAT.

The successful appeal removes the potential scenario of Goals charging players in the leagues having to pay an extra £1 on the current £5.50-a-head fee to cover the extra cost.

News of the decision saw share prices in the company rise by 3%.

At this stage, HMRC have not decided whether to appeal but issued a statement following the ruling. A spokesperson said:

‘HMRC is considering the Tribunal's decision and will respond further in due course.’

Business entertainment

HMRC Reference: Notice 700/65 (February 2012) has been updated explains the treatment of VAT charged on business entertainment.

April VAT changes

It seems more people are taking an interest in VAT. That can only be good news for those who make a living from the indirect tax, writes Les Howard of Vatadvice.org.
From the beginning of April, all remaining VAT registered businesses will have to file their VAT returns online and pay electronically from 1 April 2012, but AccountingWEB’s editors noticed a lot of people are taking a renewed interest in the VAT registration threshold. On average around 150 people are checking Nigel Harris’s article on the threshold changes announced last March that came into force at the beginning of April 2011.
AccountingWEB’s tax editor, Rebecca Benneyworth speculated whether the two issues might be related. Could companies or advisers who have clients hovering around the threshold be checking to see if it’s feasible to deregistration and thus avoid the hassle of online filing? For quick reference, the deregistration threshold is currently £71,000.
To fill out the picture, this article will recap some of the points affecting business taxpayers, and suggest a simplification measure that would remove one unfair aspect of the current arrangement.
Background
The registration threshold - currently £73,000 - is the value of taxable supplies made by a person at which he or she is required to be registered for VAT. It is obligatory.
Where taxable supplies are less than this figure, the taxpayer can choose to register. Where they make business-to-business (B2B) supplies, as a rule of thumb, it will be worthwhile registering long before the threshold is reached. Indeed, some 20% of all VAT registrations trade below the threshold.
There is a distinction between “taxable supplies” and “exempt supplies”. Exempt supplies include services such as education, finance, health and so on. Such income is not counted for VAT registration purposes. A business having only exempt income cannot register for VAT (unless as part of a Ggoup registration).
Getting it wrong
VAT is very expensive if you get it wrong! With the standard rate at 20%, and penalties for misdemeanours, errors can be costly. So, if someone is late registering for VAT, the implications can be significant. With VAT being a key part of business life, it is striking how many people still register late.
From 1 April 2010, new penalty legislation applies to people who are late in notifying their liability to register. As with Self Assessment and PAYE penalties, the rates depend on whether the failure was careless or deliberate.
In some cases, a business that registers late can go back to customers and ask them for the VAT. However, this needs to be managed carefully, so as not to give the impression of a badly run business.
Recent developments
But it’s not just the threshold increase and “digital by default” that have raised the profile of registration. HMRC has targeted different business sectors with task forces to identify and collect underdeclared tax, including VAT. One of the key questions has been whether businesses should be registered for VAT. The VAT campaign result has prompted a leap in new VAT registrations; the mere threat of official HMRC action appears to have encouraged many small businesses to register.
Why have a registration threshold?
For many businesses, the threshold creates a real hurdle. This is particularly the case with retail businesses providing services, such as hairdressers, painters and decorators, etc. Once their turnover jumps from just-under to just-over the threshold, there is a potential loss of £10,000 or more in a year.
The main reason, I suggest, that HMRC has a threshold at all is to save costs.  Comparing the cost of managing a VAT-registered business against the tax revenue it produces suggests that it is less profitable for HMRC to maintain (or restore) a low registration threshold. The comparative benefit for small business is much less.
Interestingly, on the continent the thresholds tend to be lower. My own view is that everyone in business should be registered. This would remove the artificial hurdle that exists. It would also assist with identifying those who deliberately evade VAT by not registering.
Les Howard is a freelance VAT Consultant, working with SMEs and Charities, and providing specialist support for independent accountancy practices. He post regular items in his Vatadvice.org blog on AccountingWEB

Over half of all VAT fines wrong

According to figures obtained by Hacker Young, during the 18 months to 31 October 2010 the VAT Internal Review Team considered almost 29,000 appeals against penalties imposed by HMRC for incorrect returns and late payments. In just over 50% of these appeals, the penalties were cancelled because they had been wrongly imposed. In most cases the penalties were cancelled because the mistakes made by businesses were not as a result of carelessness but rather a genuine mistake.

If that weren't bad enough, the penalties were overturned by HMRC's review team who are hardly likely to be independent!

Pre registration VAT

Great advice on pre registration VAT:


http://www.peninsula-uk.com/bottomlineexpress/447/Ask-The-Taxwise-Expert.html