Keeping figures on song needs regular checks

ANy company or small trader finding themselves on the wrong side of the law when it comes to VAT registration may be tempted to blame their accountant.

It won’t necessarily be the accountant’s fault. In the case of small businesses, accountants tend to examine their books only once a year at the most, so they may not pick up any recent breach of the £73,000 registration threshold.

Firms such as Chiene + Tait have huge experience in handling VAT and tax matters. The firm has a long established history of providing a full service to clients – it celebrated its 125th anniversary last year – and employs some 110 staff at its offices in Edinburgh and London.

“We are always prepared to offer a quick review of the accounts to see if VAT has become an issue,” says the firm’s Lynn Gemmell. “If people think that they may have a problem, then this initiative offers an ideal opportunity to sort it out.”

Regular monitoring is important, she says. “A lot of businesses will have received notification from their accountants when they are approaching the £73,000 threshold, but that may have been six months ago. In the meantime, they could have received a good chunk of income and yet not been back to the accountancy firm for a review.”

Gemmell advises that if businesses are in any way concerned that they may have a VAT liability and they have not registered, they should get in touch with a tax adviser straightaway, in order to leave good time to sort things out before the 30 September HMRC deadline.

“We think the VAT people do have certain businesses on their radar, and there will be no leeway once the initiative ends.”

She points out that businesses affected may have other outstanding tax issues to resolve and that this is as good a time as any to sort everything out. “HMRC is hoping businesses will discuss other tax problems and is encouraging them to clear up everything.”

Firms and sole traders reviewing their affairs should continue to keep a close eye on their figures even if they find that they have not breached the threshold. “They should monitor things on a monthly basis so they know what is happening, and if their turnover continues to increase, when they become liable to register.”

MAGGIE STANFIELD