Not paying VAT consequences range from a late payment penalty to imprisonment, depending on the reasons for your non-payment and the severity of the matter. If you are being investigated by HMRC for not paying VAT and are concerned about the consequences, our specialist HMRC solicitors and barristers are ideally placed to provide the support and guidance you need. You need not wait to be contacted by HMRC to seek our advice; if you suspect you have not met your VAT obligations, the sooner you address the matter, the better. By taking a proactive approach, you stand the best chance of HMRC showing leniency with any penalty they impose.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

 

What is VAT? 

VAT, short for Value Added Tax, was introduced in 1973. Along with income tax and National Insurance contributions, VAT is responsible for the majority of the Government’s income. VAT is levied on most goods and services at each stage of the supply chain, from production to the end sale to the public.

 

How much is VAT?

 There are three rates of VAT, known as the standard, reduced, and zero rates. Most goods and services fall under the standard rate, which, at the time of writing, is 20%.

 

Who has to pay VAT?

Businesses with a turnover exceeding £90,000 must register for VAT. Those with a lower turnover are not obliged to register for VAT but can choose to do so if they wish.

 

What Obligations do VAT-Registered Businesses have?

 A VAT-registered business is subject to a number of legal duties. They include the following:

  • Charging VAT at the correct rate on all its goods and services.
  • Keeping clear records of the VAT it has paid on business purchases.
  • Accounting to HMRC for VAT on the goods it imports into the UK.
  • Sending a VAT return to HMRC, usually every three months.
  • Paying the VAT it owes to HMRC.

 

What are some Common Reasons for not Paying VAT?

 There are many possible reasons why a business might not pay the VAT it owes, ranging from an innocent mistake to deliberate tax evasion.

Examples of some of the most common reasons for not paying VAT include the following:

  • The business simply forgot to pay the VAT.
  • The business can’t afford to pay the VAT due to cash flow issues.
  • The business is deliberately avoiding paying VAT.

 

What are the Consequences of not Paying VAT?

 HMRC has far-reaching powers to impose penalties on taxpayers who haven’t paid their VAT bill, so doing so should be a priority. Examples of the types of penalties HMRC can impose include the following:

  • Late Payment Penalties.

 If your VAT payment is late, HMRC will charge you a penalty, the amount of which will depend on how delayed your payment is.

HMRC won’t charge you a penalty if you pay the VAT within 15 days of it falling due. If you pay between 16 and 30 days late, HMRC will charge a penalty of 2% on the VAT you owe on day 15. If you pay 31 or more days late, HMRC will charge two late payment penalties. The first will be calculated at 2% of what you owed on day 15 plus 2% of what remains outstanding on day 30. The second late payment penalty will be a daily charge from day 31 until you clear the debt, calculated at the rate of 4% per year on what you owe.

  • Businesses found guilty of VAT fraud can face unlimited fines.

 

  • One of the not paying VAT consequences can be a period of imprisonment if the non-payment was due to fraud.

 

What should you do if you haven’t paid your VAT?

 If you haven’t paid your VAT, you must address the issue as a matter of urgency. If you have been honest in your accounting but are late in paying what you owe, HMRC may agree a Time to Pay Arrangement with you covering the outstanding VAT, penalties, and interest. You can then pay off your VAT bill by way of manageable monthly instalments. Speak to us if you’re unsure. We will advise you on your position and can liaise with HMRC on your behalf.

If you are being investigated for suspected VAT fraud, the potential consequences are severe. You should seek expert legal advice from experienced HMRC solicitors like ours to guide you through the matter. We can accompany you throughout any investigation, advising on what you need to do and protecting your interests. We have a proven track record of achieving excellent outcomes for our clients and will work tirelessly to secure the most lenient penalty available in your circumstances.

 

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.