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Small businesses warned to report changes

Small businesses warned to report changes
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23 Aug 2012

“It is important that all small businesses are aware they could face steep fines unless HMRC is kept fully updated

The Forum of Private Business is warning entrepreneurs to fully update HM Revenue & Customs about any changes to their businesses, no matter how small, following a report that one firm is facing a £10k fine for not informing inspectors it had changed its name.

The firm, which did not want to be identified but which has an exemplary record of VAT payments and submitting tax returns on time, was originally hit with a fine of over £30k under VAT notification liabilities contained in the Finance Act 1985 and later the VAT Act 1994.

The fine was imposed after the business changed from a partnership to a limited company – adding a ‘ltd’ to its name – without informing HMRC, despite it retaining the same VAT number and regardless of the fact the revenue did not lose out on tax payments.

The fine has been reduced to just over £10k after intervention from accountants and the Forum’s tax adviser Andrew Needham, of VAT Specialists Ltd, but work is ongoing to further reduce the penalty.

“I am concerned that this is a change in HMRC’s long-standing policy of waiving its technical ability to impose this penalty fine in such circumstances,” said Mr Needham.

“If this is carried through and sets a precedent it could result in huge fines being imposed on small businesses which, in reality, have done very little wrong.

“It is important that all small businesses are aware they could face steep fines unless HMRC is kept fully updated – but this heavy-handed approach is the very opposite of the support that is desperately needed at this difficult time and HMRC risks further alienating firms hit by its disproportionate, targeted business records checks regime and widely-reported poor levels of service.”

The Forum is urging all small business owners to contact its Public Affairs team about their experiences of HMRC – including if they have received fines they feel are unfair or disproportionate. They should call 01565 626016 or email publicaffairs@fpb.org  

News source: Courtesy of Glass & Glazing Magazine