If you have not registered for VAT when you should have done you have until 30 September to pay what you owe with only low penalties. After that Revenue & Customs (HMRC) will be after you.

The campaign by HMRC to get individuals and businesses trading above the VAT registration threshold – a turnover of £73,000 – to actually register is part of its efforts to reduce the £35billion gap between what should be paid in taxes in the UK and what is paid.

The Government has given the Revenue almost £1billion to tackle the problem and expects to have recovered £7billion by the end of the 2014-15 tax year. A major target area is construction, where it is not entirely unknown for contractors to offer a discount for cash.

Under the terms of the 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% on VAT that has been paid late.

After 30 September, HMRC will investigate those who have failed to come forward. It says it knows who they are from information pulled together from different sources. It says substantial penalties and criminal prosecution could follow.

To use the VAT Initiative, you must:

• Register with HMRC by 30 September to “notify” it that you plan to make a voluntary VAT disclosure
• Tell HMRC about VAT due and make arrangements to pay it, as well as any penalties due, by 31 December.

How to let HMRC know of your intention to make a tax disclosure:

Online by completing a notification form at www.hmrc.gov.uk/ris/vat/

or

Ring HMRC on 0845 600 5217, where a dedicated team is available to give information and advice.