HMRC have very sophisticated systems in place and one of these will be identifying businesses that have an annual turnover of £85,000 or more.
How will they know? HMRC obtains information from many different sources, including credit card payments, sales via Amazon, eBay, etc.
This data has allowed HMRC to find businesses that are not VAT-registered, but where the turnover indicates they should be. The turnover disclosed on the tax return might also indicate that the threshold had been exceeded.
HMRC are opening “enquiries” into those businesses and this can be a long-winded and expensive exercise.
A real-life example – a business was selling through an online retailer. The business incorporated several years ago, and the original business (holiday lets) carried on with the original VAT number, with the company setting up a new VAT number. All sales had been disclosed through the limited company. However, the VAT number had not been changed with the online platform– and sales reported to HMRC were far in excess of the VAT returns being submitted for the lettings business. It took over 12 months to resolve this. The VAT number was changed with the online retailer, and on speaking to HMRC the very next day after that change, they were already aware of it!
If this sets off possible “alarm bells” with you, give us a call now to discuss any actions required!
Tax Enquiry Fee Protection
The article above referred to an HMRC enquiry. We strongly recommend availing yourself of a tax enquiry protection service which will provide cover for accounting fees in dealing with HMRC in the event of an investigation.
Contact us for more details.
