Vince Cable, the government’s Business Secretary has been punished for failing to register for VAT. The Minister’s business income exceeded the registration threshold of £73,000 and he was consequently fined £500.

Under HMRC rules, there can be a penalty charge of up to 30% of the VAT not accounted for. Mr Cable’s unpaid VAT apparently amounted to approximately £25000 but because his accountant noticed the discrepancy - a “genuine” mistake made by the minister -  and advised that the amount should be paid immediately, the resulting fine was much lower.

“HMRC are more likely to be lenient with their fine if a VAT discrepancy is brought to their attention and any outstanding amounts paid within 12 months of the due date” said Dawn Rofe of Castlemaine Associates.

“Although any worthwhile accountant should notice an error of this scale when preparing end of year accounts, it is still important for an individual or business to be aware of their taxable profit as the tax year progresses. After all, it is the individual or business who are liable for any fine and not the accountant!”.

“VAT registration can be applied for part way through the year, so it’s a good idea to keep in contact with your accountant on a regular basis if you think your business will exceed the threshold. Don’t just wait until the end of year accounts are filed because you may be several months late and liable for a penalty”.

For more accountancy advice please contact Castlemaine Associates on 0870 778 0063.