HMRC will start a campaign later this year to investigate traders who declare turnover just below the VAT threshold. HMRC suspect any trader in this position of depressing their true sales to stay outside the VAT net. However, many small businesses who sell only to the general public, deliberately decline extra work if the extra income would take their turnover over the VAT threshold. This is not illegal just sound business practice, as it protects their prices from 20% VAT, and avoids administration costs. However, it is very difficult to prove there were no undeclared cash sales.

HMRC to target VAT cheats

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