VATMAN to look for a £1bn in unpaid tax!
It was reported on the Daily Telegraph on Saturday 15 April this year that the Taxman is to hunt £1bn 'missing' in hotel VAT payments.
It seems that the Government believes there is a shortfall from what is paid in VAT and what they should actually collect. Figures in telephone numbers probably mean little to smaller accommodation providers suffice to say that £5.2bn is what the Government believes should be paid whilst only £4.2bn is collected.
Should this be of concern to you? Well of course if you operate under the VAT threshold, £68K p.a. from 1 May 2009, then you do not qualify for registration, unless you want to be registered, if you are registered for VAT then you might want to look at your procedures and make sure you are up to date.
Most accountants offer some form of indemnity against an investigation by the HMRC usually in the form of an insurance policy you can also get cover on your general insurance policy and if you belong to a trade organisation then they may be an option there. The Federation of Small Business also have an excellent policy I understand although I have not experienced it for myself(!)
Of course all this removes money from your bottom line and you need to think whether the benefits of having cover outweighs the risks involved. If you are confident of your procedures and that you do everything properly then insurance may be an unnecessary burden.
One matter you may wish to consider is that as a 'smaller' revenue collector for the Government you will not feature high in the list for investigation of your affairs. If you have other issues though with any part of the Government's Revenue Service they will of course look for the easy option when it comes to any further investigation and if the work is partially done anyway your business would be a prime target for examination.
So what do you do?
Well here is a suggestion, visit:
//www.bandbowner.com/members/134.cfm
and check the amount of VAT you pay could not legally be reduced.
If it can, be proactive and visit
//www.bandbowner.com/members/89.cfm
download the first link at the bottom of the page which explains in details what is involved for you to save money. If after reading the government article you think it is appropriate to register for the new way of paying your VAT then down load the application form from the second link.
The scheme can save you money and it will send a coded message to Government that you recognise you responsibilities as a business owner and tax collector and wish to make sure that you are operating inside the law.
If you cannot save money under the scheme (and I would be surprised if you can't) then check your operating procedures and make sure you are up to date with all the new rulings and touch base with your accountant just to make sure.
Please do remember that HMRC are not infallible. Recent battles with Restaurants regarding service charges although not directly VAT related do show that the Governments interpretation of legislation is not always as the lawyers see it and they have backed down under some fearsome pressure from the restaurant industry.
One final word of warning if you do take out an insurance policy either as a stand alone item or as part of your main policy then be aware that if it is found that you have deliberately evaded any tax due to Government i.e. you have been knowingly dishonest, then your insurance policy will not pay any costs towards your investigation by HMRC.