Retailers risk massive penalties as Customs & Excise prepares a New Year crackdown on designated VAT avoidance schemes.
There are a number of legal schemes used by businesses. Retailers, for example, can escape VAT charges on a 2.5% ‘card-handling charge’ to customers.
However, new legislation means that the authorities can impose fines on retailers who don’t inform Customs & Excise that they are using this common practice.
Martin Johnson, partner at our Sunderland office, said the first fines are likely to be issued in the New Year:
“Failing to declare the use of legitimate VAT avoidance schemes like this can mean hefty penalties. Retailers should take steps to keep their accounts in order to avoid being caught out in a VAT inspection.”