By Max Clarke

HM Revenue & Customs are sending out some 40,000 letters warning non-VAT registered businesses to pay what they owe.

Businesses turning over more than the current £73,000 threshold are obliged to register for VAT. Those who are yet to register are being extended a grace period lasting until 30th September.

This marks the latest in a, ever-increasing series of crackdowns; from January’s targeting of incorrect financial records to more recent efforts to clamp down on channel island tax cheats.

“This is our third campaign, raising more than £500m from voluntary disclosures and a further £100m so far from follow-up activity,” said HMRC Risk and Intelligence Director, Mike Wells.

HMRC, notes George Bull, Tax Partner at Baker Tilly, have a tendency to display a "'knee-jerk' impulse to start a campaign without seeking or considering the views of others.

"A recent example of this," continues Bull, "concerns HMRC’s Business Records Checks (“BRCs”) project, under which the department started to “test and learn” before they had fully digested the external responses to their own consultation document. Our experience of the “test and learn” pilot is that initial BRCs visits are fairly superficial and largely meaningless for properly advised businesses and therefore could be much better targeted.
While it is understandable for HMRC to feel under pressure to improve compliance, tackle evasion and increase the tax take, we urge the department to continue to engage in realistic consultation with any interested parties who are willing and able to provide constructive commentary.

“Our campaigns are designed to ensure tax is paid so that the money is available to spend on public services used by everyone."

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