VAT clampdown could affect businesses and consumers
Posted on August 20th, 2009
Historically cash-based industries, notably the building trade are being targeted by the HMRC in a clampdown on VAT evasion. Plumbers, builders, electricians and carpenters are all examples of the trades that HMRC are trying to catch up with.
Cash payments could find consumers on the wrong end of HMRC as they try to reduce the £780 million in lost VAT every year. Where a tradesman comes under investigation by HMRC, they are contacting customers to corroborate the builders accounts.
The customer may face a £300+ fine if they do not provide receipts or statements within a set period. If the invoices do not tally up then harsher penalties can be enforced. If HMRC prove that a customer has conspired with a builder to avoid VAT costs, then an unlimited fine and 7 years in prison could be enforced. Although the likelihood of this occurring is small, it is worth consumers bearing in mind.
Builders and tradesman with an annual turnover of £68,000 or more must be VAT registered. It is important to obtain VAT receipts for all your work, no mater what payment method you use.
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