A clampdown on tax dodgers was launched yesterday as traders who have failed to register to pay VAT were given a chance to come forward.
Small businesses such as builders may not have realised that their turnover was above the threshold of £73,000, while others could have been avoiding paying the tax, officials said. More than 40,000 letters will be sent out over the next few weeks offering those who have not registered the chance to come forward before 30 September and avoid a maximum penalty.
HMRC said that where traders have to pay a penalty on undeclared tax other than VAT, this will be lower than the customary penalty of up to 100 per cent charged to those who fall outside the opportunity.
HMRC warned it would investigate all those who fail to come forward before 30 September, and substantial penalties or even criminal prosecution could follow.