HMRC to crackdown on VAT cheats ~ Debt Managements and Consolidation

HM Revenue & Customs (HMRC) has announced an initiative to crack down on companies that fail to comply with VAT rules.

The new campaign will focus on individuals and businesses trading above the VAT threshold - currently at £71,000 - who have not yet registered for VAT. It will be the latest in a line of campaigns by HMRC, which recently targeted offshore investments.The percentage of bankruptcy orders involving trading debts was 18.9 per cent in the fourth quarter of 2010, which is considerably higher than the levels published by The Insolvency Service in recent quarters.Vance Parsons, director at EuroDebt, said: “Small businesses, including sole traders, are coming under financial pressure from a variety of fronts and HMRC may soon be added to this list. As a provider of face-to-face debt advice, our advisers see many micro business owners that struggle to separate their personal finances from their business finances.“This can cause serious problems, especially if you are likely to be subject to scrutiny in terms of what represents business income & expenditure, where record keeping may be seen as time consuming or a distraction from trying to generate new business or protect existing income streams.“Many business owners have incurred considerable personal debts, like maxing out credit cards, to protect their business and now need both personal debt advice and access to a business recovery specialist. This forms part of a holistic debt solution, where protecting personal and business assets may be very important.”The initiative is being discussed with interested parties to ensure HMRC has as much information from them as possible before launching the campaign later in the summer.Previous campaigns have used new technology and legislation to gather and analyse data, from internal and external sources, to identify people who should come forward. This has provided thousands more investigations, now being worked through, including a number of criminal investigations.Mike Wells, HMRC's Director of Risk and Intelligence, said: “Our aim is to get as much input as possible into our future campaigns so that the views and experience of people and organisations outside the department play a fuller part in what we design for customers.“We are already in contact with a number of interested parties and I expect many more to contact us with their views before we finalise the design of the VAT initiative.“This will be the model for all our future campaigns and we look forward to being even more open about the compliance activity HMRC is undertaking to ensure we reduce the tax gap and help customers pay what they owe.”HMRC has raised over £500 million from voluntary disclosures and a further £100 million so far from follow-up activity.
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