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August 11 2012
Small businesses are being warned to keep the taxman fully informed after a firm faced a £10,000 VAT fine over a minor name change.
The fine was imposed after the business changed from a partnership to a limited company, adding a ‘ltd’ to its name, without informing HM Revenue & Customs (HMRC), despite it retaining the same VAT number and regardless of the fact that no tax payments were missed.
The Forum of Private Business is warning owners to fully update HMRC about any changes to their businesses, no matter how small.
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 has been reduced to just over £10k after intervention from accountants and the Forum’s tax adviser Andrew Needham. “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,” said Mr Needham.
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