Taskforces and voluntary disclosure campaigns are becoming key weapons in HMRC's arsenal to tackle evasion, avoidance and fraud. This follows the earmarking of £900 million to tackle these problems with the battle plan being to raise an additional £7bn each year by 2014/15.

VAT has become the latest target in this strategy. Both a disclosure campaign and a taskforce are currently in operation and action is needed now for those affected to minimise penalties and avoid prosecution.

The VAT Initiative

The latest disclosure campaign is aimed at those trading above the VAT threshold - currently £73,000 - but who have not yet registered for VAT. Under the terms of the VAT Initiative, those who have not registered to pay VAT can come forward any time up to 30 September to tell HMRC that they want to take part. If they make a full disclosure, most face a low penalty rate of 10 per cent on VAT that has been paid late.

Mike Wells, HMRC's Director of Risk and Intelligence, said:

'I urge people who have not registered their businesses for VAT to get in touch with HMRC and get their tax affairs in order simply and on the best available terms.'

Further details can be found at www.hmrc.gov.uk/ris/vat/

Once this opportunity passes, taxpayers who have not come forward but are found to have unpaid tax liabilities will face higher penalties, rising to 100 per cent of the tax evaded or, potentially, criminal prosecution.

Taken to task

A taskforce to tackle VAT abuse in London's fast food outlets was also announced in July. This is the 4th taskforce launched by HMRC since May 2011.

Taskforces bring together various HMRC compliance and enforcement teams for intensive bursts of activity targeted at specific sectors and locations where there is evidence of high risk of tax evasion. HMRC has identified that there is a problem with some fast food outlets deliberately falsifying their records and incorrectly declaring their true sales levels in order to avoid paying the correct taxes.

Please do contact us for assistance and guidance if these matters are of relevance to you.