If your business trades above the VAT threshold of £73,000 but is not registered, watch out! Revenue & Customs (HMRC) have you in their sights.

As part of a campaign aimed at VAT rule-breakers, HMRC are posting letters informing businesses how to register to pay what they owe.

More than 40,000 letters will be sent over the next few weeks. Under the terms of this VAT Initiative, those who have not registered to pay VAT can come forward any time up to 30 September to tell HMRC that they want to take part. If they make a full disclosure, most will face a low penalty rate of 10% for late payment of VAT.

Companies will also be invited to disclose any other tax arrears. Where they have to pay a penalty on undeclared tax other than VAT, this will be lower than the customary penalty of up to 100% charged to those who fall outside the opportunity.

After 30 September, using information pulled together from different sources, HMRC will investigate those who have failed to come forward. Substantial penalties or even criminal prosecution could follow.

This is HMRC’s third such campaign. They have so far raised more than £500million from voluntary disclosures and a further £100million from follow-up activity with more expected as investigations continue.

Mike Wells, HMRC’s Director of Risk & Intelligence, says: “Our campaigns are designed to ensure tax is paid so that the money is available to spend on public services used by everyone.

“The aim is to make it easy for individuals and businesses to contact us, make a full disclosure of their income and face a reduced penalty on any tax owed.

“I urge people who have not registered their businesses for VAT to get in touch with HMRC and get their tax affairs in order simply and on the best available terms.”

Let HMRC know of your intention to make a tax disclosure:

• Online by completing a notification form at www.hmrc.gov.uk/ris/vat/
• Telephone HMRC on 0845 600 5217