HMRC have announced that from 9 January 2013 they are embarking on a new campaign to chase up businesses that have one or more VAT returns outstanding. Their announcement reminds businesses that failure to submit a VAT return is an offence and penalties could be levied on top of any additional VAT that might be due to HMRC.
However, somewhat unhelpfully, they have also stated that detailed information about how they plan to approach this campaign is not going to be released until the date the campaign is launched!
What to do?
The obvious answer is to get your outstanding VAT return(s) completed and submitted online as soon as possible and, preferably, before 9 January 2013 (yes I know that’s now impossible!) to avoid getting caught up in this campaign.
What if you cannot pay?
Get the VAT return completed and submitted anyway and, where possible, make whatever payment they can with the return.
You should also contact HMRC on 0845 302 1435 (Business Payment Support Service) or 0845 010 9000 (General Advice Line) to explain that the return has been submitted (with part payment where appropriate) and ask about the possibility of negotiating a Time To Pay (TTP) arrangement.
You will need to explain the circumstances why they are unable to make full payment and what steps they have taken to find funding to meet the debt. They will also be expected to make a proposal of the timescale over which they will meet the full liability taking into account that any TTP arrangement will only be entertained on the condition that future returns are submitted and paid in full by the due date.
HMRC’s agreement to a TTP arrangement is by no means guaranteed so they will need to be prepared to put forward a justifiable case for further deferral of payments.
Failure to submit a return or pay in full by the due date can result in a Default Surcharge ranging from 2% to 15% of the unpaid tax. However, worryingly in certain circumstances, HMRC might look to impose Civil Evasion Penalties.