Sage Blog

As HMRC’s latest tax initiative reaches its last few weeks, we recap on the scheme.

Since early July, HMRC have been targeting – via a series of direct communications  – approximately 40,000 UK businesses who should now be VAT registered, having already reached the current VAT threshold of £73k. If you are an accountant, you could well have clients who’ve been contacted in such a way.

HMRC say that failure by these targeted businesses to register for VAT will result in serious implications. Put simply, if a business reaches the threshold and remains unregistered, HRMC will recoup the full tax owed and may charge a substantial penalty for non-disclosure.

However, as part of this brief ‘VAT Initiative’ period, HMRC are aiming to raise an estimated £600m from a voluntary disclosure process. The current campaign encourages those with outstanding liabilities to come forward and make a full disclosure in exchange for preferential settlement terms. It states that most disclosures will qualify for a 10% penalty, instead of the normal penalty of up to 100% of the tax, as well as the likelihood of the disclosure being accepted without undergoing any follow up queries.

After the registration deadline of 30 September 2011, HMRC has warned that it will start investigations into businesses that have not come forward, by making use of information compiled using ‘web-bot’ software. Using this software, HMRC can now more accurately pinpoint businesses that have failed to pay the right tax by matching a vast amount of data, enabling a fast and focused response to tax evasion. It highlights previously hidden relationships, uncovering anomalies between such elements as bank interest and property income.

What’s the process if your clients have been targeted under this initiative?

Firstly, the business will have to decide whether it wants to notify HMRC, or run the risk of carrying on unregistered. If the business decides to notify an intention to make a disclosure, it has until 30 September 2011 to do so by downloading and completing the VAT Initiative Notification Form.  Unfortunately, the form can’t be filed with HMRC online, instead it must be posted.

The business then has until 31 December 2011 to provide HMRC with a full disclosure – by filling out a VAT1 form – and to pay the tax, interest and penalties. It’s vital for the business to include on this form the Notification Reference Number (NRN) they receive once the initial notification has been processed.  Without the NRN, a business will not be able to take advantage of the lower penalties on offer as part of the initiative.

The facility also allows for the disclosure of additional, related tax liabilities, other than VAT. Again these can be disclosed with a lower penalty than HMRC would charge during an investigation.

How can Sage accountants help?

Although promoted as a straightforward process by HMRC, it is clear from the guidance there are a number of taxpayers and circumstances where the full benefits of the VAT Initiative may not apply. Businesses in such a position will be advised to contact their accountant.

You may not have any clients who’ve been targeted by the initiative, but we’d still stress the importance of any business to maintain accurate and complete bookkeeping records. Sage offers a range of solutions to assist, all of which boast fast, first-time online filing of VAT. Sage Instant Accounts, Sage 50 Accounts, and our online accounting solution, Sage One*, all offer comprehensive VAT management and online filing. For more information on VAT management software available for your clients, call us on 0845 111 1111 today or visit www.growgreenshoots.co.uk.

*online VAT filing facility offered in Sage One Accounts

Georgina Timothy, Sage Accountants’ Division Trainer

Here at Sage we’re busy organising a special event for our Sage accountants on the 21 July. If you’ve not come across a Sage accountant before, you’re probably wondering what they are.

What are Sage accountants?

Well, Sage accountants aim to deliver the best possible service to their customers when it comes to Sage software and services. So, if you’re looking for an accountant it’s a great place to start.

It’s a really important relationship to us, so not only do they get training, specialist software and dedicated support from us, this year we are inviting them along to an exclusive event, Sage Connect 2010.

 Sage Connect 2010 event

Sage Connect 2010 gives our accountants a chance to stay ahead of their peers with the latest information from industry leaders, as well as inside information about us, and what lies ahead.

If you’re one of our accountants, you should have received your invite by now, and hopefully you’ve already got it in your diary. And here are the  keynote speeches you’ll get to see:

• Julian Hatt from the HMRC who’ll be talking about the Corporation Tax and iXBRL aspects of Lord Carter of Coles’ 2006 Report: Review of HMRC Online Services, as well as HMRC’s approach towards transitional measures and extraneous developments that are impacting on the implementation of iXBRL
• Spencer Kelly from BBC’s “Click” will be giving an insight into business technology and emerging trends
• Michelle Sansome of the Accounting Standards Board will provide an overview of plans and timelines for International Financial Report Standards for SMEs and Microentities
• Jack Mansfield from Companies House will speak about eFiling plans and future developments

Help shape the way we develop our software and services

Have you got ideas or opinions regarding our software? Then, you’ll have a chance to pose your questions to the Sage team, including Jayne Archbold (Managing Director of Sage Accountants’ Division), and Heads of Research and Development for some of your key Sage software. You’ll also find out how to become a BETA customer and help with shaping Sage software, and as a taster get the first glimpse of the features in Sage Practice Solution.

Workshops

There’s a wealth of workshops available to you, with something for everyone. Personally I’m looking forward to ‘Cloud Computing? What, Why and How?’

Celebrating success

We’re particularly excited to introduce our Sage Accountants’ Awards 2010, which will be co-hosted by Nick Hewer from BBC’s The Apprentice.

This is a chance to celebrate and recognise the achievements of accountants in practice, and the contribution they make to UK businesses. With our Pulse survey showing that 60% of small businesses want sound business advice and consultancy from their accountants, it certainly seems like the right time to celebrate the contribution made by Sage accountants to British business.

If you’ve been entered we wish you the best of luck.

Come and join us

One of the most productive aspects of conferences is networking, and we’ll be hosting a drinks reception in the evening. You’ll have a chance to have a more informal chat with other attendees and the Sage team, so we’re looking forward to seeing you there!

If you’d like to join us, please send an email to sageconnect2010@sage.com

Daniel Duran, Sage Accountants’ Division