HMRC clamp down on non-VAT-registered traders that trade above the VAT threshold
HM Revenue and Customs revealed they are writing to non-VAT-registered traders they think are trading above the VAT threshold.
Business must register for VAT once their historic taxable turnover exceeds £85,000 for the previous year, or if it expects its taxable turnover to exceed the threshold in the next 30 days.
Sales that are exempt from this threshold include land and insurance. However, reduced-rate and zero-rated sales are not exempt – such as repairs.
If your business exceeds the threshold, you must notify HMRC within 30 days of the month’s end and register from the first day of the second month.
Businesses must notify HMRC by the end of the 30 days after the future expectation arose and becomes registered from the start of the 30th day.
If you miss the VAT registration deadline, HMRC may charge you a penalty based on a percentage of the net VAT payable between the date of the registration date and the date you registered. This penalty ranges from five to 15 per cent, depending on the number of days it is late.
Additionally, if your business receives a letter, you should review your turnover figures to ensure you did not surpass the £85,000 threshold. It may be best to review as far back as possible to ensure you have not missed a reporting requirement.
For more information or advice on related matters, please contact us today.