As part of a campaign launched last month aimed at VAT evasion, HMRC will be sending letters informing businesses how to register to pay outstanding VAT. The new campaign focuses on individuals and businesses trading above the VAT threshold of £73,000 turnover but who have not registered for VAT.

This latest campaign provides an opportunity to notify that registration for VAT should have occurred or to correct a previous error. HMRC must be notified by 30 September with registration by 31 December to benefit from a lower penalty.

More specifically the campaign is aimed at businesses that:

• have already passed, or are expecting to pass within the next 30 days, the current VAT threshold of £73,000;
• have passed the VAT threshold in a previous 12 month period but did not register for VAT;
• require HMRC assistance to register; and
• want to take advantage of a reduced penalty.

Not registering for VAT when the threshold has been exceeded is an offence and, in addition to the VAT due, there may be penalty charges. Under this current initiative, if HMRC are advised voluntarily before 30 September, a lower penalty will be incurred than if HMRC have to enforce registration. In some cases, there may be no penalty charge. It may also be possible to spread the length of time over payment is made rather than paying in one lump sum.

HMRC anticipate issuing more than 40,000 letters over the next few weeks. Those making a disclosure may also be invited to disclose any other tax arrears. Where a penalty arises on undeclared tax other than VAT, this too may be lower than the customary penalty of up to 100% charged to those who fall outside the disclosure opportunity.

More information is available at http://www.hmrc.gov.uk/ris/vat/introduction.htm