Accidentally way over VAT threshold

[Tomal4lo]

Hello,

I run construction company and my business mostly is about getting a customer ( private householders) and after getting a subcontractor to do the job under my supervision.

I started it as a self employed in April 2011 ( I was 24 that time) and generally it was very big step for me because within 4 years before I could barely afford to pay a rent for my room ( income around 10k per year) not mentioning paying an accountant to do my tax return ( I was self employed all these years). However as mentioned above I stepped into construction by hiring subcontractors and getting quite good profit.

Somewhere in March/April 2012 I was wondering about my tax returns and when I started reading about everything related to taxes I found out about VAT !! I literally discovered that that day I must be registered once my turnover will go over £75k and that time it was exactly £121k. To be honest I though that VAT is only for some big companies and I actually did not know the meaning of VAT.

My questions:

- what is the worst case scenario?
- any chance I can somehow avoid this VAT or reduce it at least?
- any chance that my lack of knowledge/information about VAT/taxes, young age and very low income over last years can make HMRC to forgive and leave me alone?
- I am not UK citizen. Can I leave a country and hope VAT problem will just disappear?

By the way. I contacted HMRC about it and even sent them VAT registration form but somehow they can't find my details and they tell me every week they will call me or post me some letter but actually the don't do anything.

4 months ago I formed limited company and registered for VAT and I do pay VAT every 3 months BUT I am worried about my personal account and that VAT nightmare. I guess once I fill my tax return for 2011/2012 they will contact me straight away ( not like before where HMRC ignored my application for VAT and any enquires) and request to pay BIG amount!

Sorry for my bad english!

Any advice will be much appreciated.

HELP!

[northernladuk]

My questions:

- what is the worst case scenario?

Gaol (or Jail if you are not British)

- any chance I can somehow avoid this VAT or reduce it at least?

No idea, get an accountant pronto

- any chance that my lack of knowledge/information about VAT/taxes, young age and very low income over last years can make HMRC to forgive and leave me alone?

Nil, zero, zip nada. Ignorance is not a defense to HMRC

- I am not UK citizen. Can I leave a country and hope VAT problem will just disappear?

That would be the best plan.

[stek]

Accidentally way over VAT threshold

Are you from the EU?

[NotAllThere]

Read this.
Talk to an accountant.
Get your accountant to arrange a payment deal with HMRC.
Prison is only likely if HMRC can show that you deliberately evaded registration.

The penalty for being more than 9-18 months late in registration is 10% of the VAT due. You have to pay that on top of the VAT due.

You're looking at having to pay somewhere around £15'000, but your accountant will tell you the exact figure. That's probably not enough to make you want to flee the country!

[d000hg]

Did he say the turnover was £121k while he was self-employed, presumably a sole trader*, before creating the company? If so does VAT apply to sole traders?

[cojak]

And don't forget who you're dealing with. The Inland Revenue (Corp Tax, IR35 etc) are a bunch of bowler hatted jobsworths who can hardly find their arses with their own hands. The Customs and Excise (VAT, Excise duty, etc) are a bunch of efficient ruthless bastards who have had rogues and smugglers shooting at and generally trying to kill them for centuries.

I like the VAT man - you treat him right, he'll treat you right.

Try to diddle him and he'll come after you with a red hot poker.

(Or her, obv…)

[jmo21]

Did he say the turnover was £121k while he was self-employed, presumably a sole trader*, before creating the company? If so does VAT apply to sole traders?

yes

[LisaContractorUmbrella]

And don't forget who you're dealing with. The Inland Revenue (Corp Tax, IR35 etc) are a bunch of bowler hatted jobsworths who can hardly find their arses with their own hands. The Customs and Excise (VAT, Excise duty, etc) are a bunch of efficient ruthless bastards who have had rogues and smugglers shooting at and generally trying to kill them for centuries.

I like the VAT man - you treat him right, he'll treat you right.

Try to diddle him and he'll come after you with a red hot poker.

(Or her, obv…)

Had you thought about Wiki for this definition Cojak

[cojak]