HM Revenue & Customs has warned business owners they could be fined if they fail to register for a particular tax or pay tax on undeclared income.
Under the regulations, which took effect from April last year, business owners are required to tell HMRC if their business is liable to pay tax because it has made a profit and if its turnover has reached the VAT registration threshold.
Similarly, HMRC says it should be notified if a business owner is liable to pay tax because of a capital gain from selling an asset, and if they have an income that is not taxed and undeclared.
Failure to notify HMRC will result in a fine, which will be worked out a percentage of the tax owed, and repayment of the outstanding tax. A higher penalty might be enforced if income is falsely represented or deliberately hidden.
HMRC can reduce the penalty to zero if contact is made within 12 months of the change in income.