Client not registering with HMRC re VAT

Client not registered for VAT and years of filing outstanding

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A new (referred) client approached accountancy firm with years of sole trader accounts (11/12 onwards) outstanding (partly due to personal and health issues) and debts north of £50k owed to HMRC on income tax and fines.  It turns out sole trader is also over the VAT threshold and prior accountant had repeatedly asked the client to register for VAT.  Going to resign as accountant but before I do should I report the client to HMRC and/or NCA ?  The firm has accrued the VAT on one set of accounts filed for client but clearly client is not going to be forthcoming to HMRC given the repeated reminders to inform HMRC falling on deaf ears.

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David Winch
By David Winch
20th Mar 2017 11:39

You cannot report this to HMRC unless the client has given you authority to do so (which presumably he has not & will not).
If you suspect the client is being dishonest (for example where he realises that he is legally obliged to register for VAT but refuses to do so), and that he has obtained a benefit from that (so, for example, he is not a refund case), then you are obliged to file a Suspicious Activity Report with the NCA unless one of the exemptions applies.
I cannot see any sign of the exemptions applying here (for example, he has NOT requested you to advise him on how to regularise his VAT / tax affairs with HMRC).
You can file the SAR online via
http://www.nationalcrimeagency.gov.uk/about-us/what-we-do/economic-crime...
David

Thanks (1)
By mrme89
20th Mar 2017 11:50

It might be the case that your client should be referred to an insolvency practitioner.

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