Here’s an amusingly embarrassing cock-up to brighten up an otherwise gloomy week. Business secretary Vince Cable, a fierce champion of punishing tax evaders, has been hit with a £500 fine for failing to register for VAT after his freelance earnings exceeded the VAT threshold, which currently sits at £73,000.
HMRC have recently ended a large-scale VAT registration “amnesty”, which aims to persuade those earning above the threshold to voluntarily register and face a reduced penalty as a result. A few months ago plumbers were targeted, and criminal proceedings were brought against six individuals who failed to ‘fess up to their earnings. In this instance Dr Cable’s accountants appear to have made a voluntary admission to HMRC, resulting in a reduced fine of £500 – it would have ordinarily been £1,000.
The Sun, who broke the story, estimate that Cable’s income from freelance work (including after-dinner speaking, books and media deals) totalled £192,000, on top of his MPs salary of £65,738. Around a quarter of his freelance income was donated to charity, reducing the total amount of tax owed to around £15,000.
All schadenfreude aside, this case does go some way towards highlighting how even the most tax-savvy individuals (a category we would assume Cable would fall into, given he oversees many of the UK’s business tax issues) can fall foul of the UK’s increasingly complex financial rules and regulations.
Cable’s staff were quick to point out the mistake was made unknowingly, and every effort was made to correct it once the problem had been identified.
