VAT registration amnesty announced
HMRC have recently announced that they are commencing a purge on businesses that are not VAT registered, but which should be. I suspect that they are looking at businesses that have submitted accounts to HMRC i.e. the "Taxman", showing them with turnover in excess of the threshold. The expression "shooting at fish in a bucket" springs to mind, of course, but they have to start somewhere. They are, of course, publicising this initiative and hoping that other businesses will crawl out of the woodwork as well. The carrot that they are offering is the ability to come clean, without too much punitive damage. However, if you have been trading for a while and not charging VAT, HMRC will want the notional VAT from you - and whether or not your customers will be happy to pay up after the event is debatable. If you do the decent thing, though, HMRC are suggesting that they will only charge you a 10% penalty on top - well, on top of the VAT that you should have charged. Bless.
But if you ignore them you could be looking at something approaching a 30% penalty, or worse..
One final point - if you are unregistered, you should be monitoring your income on a 'rolling' 12 month basis, not simply looking at it at the end of your financial year.
Budget 2011
As ever, the world of VAT toodles along, with few highlights, so it is difficult to get excited about the things that are changing. But let's not start on a negative - here's a few goodies for you:
VAT registration limit (previously £70k) going up to £73k. [They call it "revalorisation" of the threshold - what is that all about?] This will apply from 1 April 2011.
De-registration limit going up to £71k, from £68k, again effective on 1 April.
There is one interesting change though - the "low value consignment relief" being reduced from £18 to £15. For those who don't know what this is, it is the value of individual deliveries coming into the UK that slip past HM Customs intact, with no duty or VAT being charged. This is what allows you to get cheap CDs, flowers, vitamins etc. from the Channel Islands - as it would have cost more to collect the taxes than HMRC would gain from collecting them. I don't know that this will stop the trade, but there you go.
Fuel scale charges will rise as they usually do - from
VAT periods commencing after 1 May 2011.
I would have to express surprise at mention of the wacky "Online Registration Wizard", which I believe is a posh way of saying that if you register for VAT, you must do it online. Why do they think it is better to dress it up in this way?
And I've just noticed a really cheesy mention of a plan which will "....accelerate the move of customers to access services through efficient online channels." Of course it will, especially if you make it sound as if it is of benefit to the 'customer'.
Furthermore, they are planning for everyone to do online VAT returns as well - those who have escaped thus far will be forced into it from 1 April 2012.
And finally, further down the page, there is a bit of slush about how HMRC are improving things, in which they mention "operational grit". That's what is called an error, in the real world..
Mr Angry is let loose again
Yes, here it comes again - a vitriolic attack on HMRC. And no apologies for this.
A few weeks ago, I was asked to help out a client who was getting some grief from HMRC about some outstanding returns - and about £70k allegedly owing. I duly wrote to HMRC, on 19 February 2010, but received no reply. I then tried phoning the National VAT Advice Line. I should have known better, as all I got was an answering machine telling me they were busy. I tried on numerous occasions, at different times of the day, for the next week or two. No joy, still the same supercilious woman apologising that they were busy. How can they be too busy at 7.30 pm? I later emailed, twice, but again, at the time of writing this, I have still not had a reply.
Over the past few years I have become increasingly irritated at the refusal by HMRC to provide sensible written advice to taxpayers and I have all but given up on this, despite enlisting the help of various accountancy bodies - the CIOT and the IIT to name but two. I was even invited to a meeting at the Treasury by HMRC, but soon realised that those in charge of telling the front line staff how to respond were on a different planet from the rest of us.
I am sure that HMRC acknowledge that most taxpayers are anxious to get it right - to declare the right amount of tax at the right time. However, there is also an acknowledgement that VAT law is quite complex, but sadly they seem to forget that not every businessman is a VAT expert. Just occasionally, therefore, it would be nice to think that when someone asks for help, that help could be given.
Nope, sorry they don't.
It is either "Sorry you haven't covered the 20 points on the checklist" that are required before you can even ask, or else "We are not obliged to provide an answer when the topic is covered in our published guidance." OK, but do you really expect a builder to find your website? Then find the requisite publication? Then find the appropriate paragraph in that publication? And then be confident enough with the answer to be able to apply whatever the answer is? Well, sorry, this is the real world, and you are sadly deluded if you think that this is acceptable behaviour for civil servants to adopt. You might be able to find and understand the guidance. I might be able to find the answer, but do you really expect a builder to be able to find and apply the answer without a little help?
Oh, and another thing - when I write to you seeking confirmation of something, why do you bother telling me where to look in the guidance? Do you not think that when a VAT consultant writes to HMRC, they have not already looked there?