If you are registered for VAT but have not sent in all of your VAT Returns, you may not be paying the right amount of tax. The VAT Outstanding Returns campaign was an opportunity for you to bring your VAT Returns and payments up to date. To have taken advantage of the best possible terms you should have completed and submitted all your outstanding returns by 28 February 2013.
If your VAT Returns are still outstanding, your tax affairs will now receive closer attention from HM Revenue & Customs (HMRC).
If your VAT Returns are still outstanding, you need to submit them now. Virtually all VAT-registered businesses must submit their VAT Returns online and pay any VAT due electronically.
Paying your VAT online by Direct Debit gives you more time to pay than any other method - a minimum of ten extra calendar days.
Not submitting your VAT Returns is an offence. If you have underpaid VAT because your returns are not up to date, you may have to pay a default surcharge, a penalty, or both on top of the VAT you owe.
You may not have sent in your VAT Returns because you believe you are no longer required to do so. This might be due to a change in circumstances, such as:
You can apply online to cancel your VAT registration, or you can complete and send in a form VAT 7.
If your business circumstances change you must tell HMRC.
When you are registered for VAT, you must keep certain business records and VAT records of your sales and purchases. You must also keep a separate summary of your VAT, called a 'VAT account'. There is no set way of keeping these records and accounts but in most cases, they can be easily adapted from your normal business records. The main thing is to ensure that they are complete and up to date, and that it is easy for VAT officers to access them if you have a VAT inspection.
HMRC has introduced a number of accounting schemes to simplify your VAT.
You can use annual accounting if your estimated VAT taxable turnover during the next tax year is not more than £1.35 million.
You can use cash accounting if your estimated VAT taxable turnover during the next tax year is not more than £1.35 million.
If your VAT taxable turnover is less than £150,000, you could simplify your VAT accounting by calculating your VAT payments as a percentage of your total VAT-inclusive turnover.
If you use standard VAT accounting, you might be able to claim Bad Debt Relief. If you sell VAT taxable goods or services to a customer, you have to pay the VAT element to HMRC. If your customer does not pay some or all of the amount due you can reclaim the VAT you charged and paid to HMRC but did not receive.
HMRC will now be targeting those businesses who failed to submit their outstanding VAT Returns by 28 February 2013. They will use information from various sources and may carry out checks into your tax affairs or use legal powers to get detailed information about your finances.
If you are found to owe VAT you may face higher penalties than if you had come forward voluntarily. You may even face a criminal investigation.
When a return is not received, HMRC will estimate what you owe, and so you might pay more than is actually due.