If the potential collapse of the euro and threat of a return to
recession were not enough to herald a bleak start to 2012, VAT
registered businesses will also have to make arrangements to deal
with VAT electronically or risk significant penalties, says
chartered accountant Clement Keys.
HM Revenue & Customs has ruled that, for VAT returns
commencing on or after 1 April 2012, all VAT registered firms must
file online and pay any VAT due by electronic transfer. Although
there are some exemptions - businesses involved in an insolvency
procedure and practising members of religious orders whose beliefs
prevent them from using computers can apply to continue filing
paper returns - Clement Keys is advising SMEs to take action to
meet their new obligations sooner rather than later.
"The penalties for failing to file electronically will not be
based on the liability of the VAT return, but on the business's
turnover for the last 12 months, which means that businesses with
an annual VAT-exclusive turnover of £100,000 or less could
face a fine of £100," says Director of VAT Services Steven
Simmonds.
"What's more, the penalties for non-compliance will be in
addition to any penalties that arise because the VAT return or
payment was received after the due date."
Unfortunately, electronic filing could pose particular problems
for businesses in rural areas where, according to research by the
Countryside Alliance, the government-sponsored rural superfast
broadband trials announced in 2010 have yet to get underway. A lack
of broadband access will therefore result in many small businesses
being forced to use local libraries or incurring extra expense as
they pay for professional support.
Electronic payment can also cause extra work for businesses that
do not operate an online bank account, because to pay
electronically they will need to visit their branch to set up
payment by BACS or Bank Giro Credit.
"SMEs are already contemplating a difficult year ahead and now
they are being hit with extra red tape, but it takes time to
register with HM Revenue & Customs and set up the necessary
internal systems to deal with online filing and electronic VAT
payments, so we recommend that firms review their situation and
take action as soon as possible," adds Mr Simmonds.