SMEs urged to get on top of VAT returns in HMRC clampdown

IN: Business news

Small and medium-sized enterprises (SMEs) must be on top of their VAT returns if they are to avoid an investigation from HM Revenue and Customs (HMRC).

The tax office is clamping down on VAT to ensure all businesses registered for the tax are paying their dues.

As such, HMRC warns that organisations that have not sent in all of their VAT returns may not be paying the right amount of tax.

Up to 50,000 businesses have been singled out by HMRC for not submitting VAT returns and will receive warnings this month that their tax affairs may come under close scrutiny.

Companies yet to sort out their VAT returns have until February 28th to get up to date and pay what they owe, which should be done online so payments can be made electronically.

Head of HMRC campaigns Marian Wilson said: "If HMRC has sent you a VAT return and you have not yet taken action, this campaign is a reminder to bring your tax affairs up to date. But time is running out.

"After 28 February, if they have not submitted their outstanding VAT returns, and paid what they owe, HMRC will use its legal powers to pursue outstanding returns and any VAT that is unpaid. Penalties, or even criminal investigation, could follow."

Help is on hand for smaller firms, as HMRC has introduced a number of accounting schemes to help them simply their VAT.

Annual accounting can be used if an SME's estimated VAT taxable turnover during the next tax year is no more than £1.35 million, with the same threshold required for cash accounting.

A flat rate scheme is also in place for businesses with VAT taxable turnover below £150,000, which can enable them to simplify their VAT accounting by calculating VAT payments as a percentage of the company's total VAT-inclusive turnover.  

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