Customs offers VAT late-registration penalty amnesty

In a surprising move for what is generally regarded as a hard nosed organisation HM Customs and Excise has just announced a moratorium on late notification penalties.

At the moment this announcement appears only to have been made public in Scotland but UKTECH has confirmed that the moratorium does apply across the whole of the UK.

Freelancers should be aware that if their turnover exceeds the current VAT threshold of £56,000 then they are required to register for VAT. There is a 30 day deadline for registering and if the deadline is missed Customs and Excise can levy a penalty of 5 per cent of the VAT that is due since the date on which the business should have registered. More than nine months late and the penalty rises to 10 per cent and if you are over 18 months late the penalty is 15 per cent.

However in a move which they say is “to support and assist businesses in achieving compliance," a one-off scheme has been introduced by Customs and Excise to encourage businesses that are trading above the VAT threshold to register for VAT.

Under the scheme, any business that voluntarily applies to register for VAT between now and September 30, 2003 will not have to pay the penalty; as long as they help Customs work out when the business should have been registered.

So if you have been remiss in registering for VAT now is the time to put it right before HM Customs and Excise revert to their stereotypical image of being rather tougher than Special Branch! :-)