The Forum of Private Business (FPB) is urging entrepreneurs to get in touch if they feel HMRC is imposing unfair or disproportionate fines, following a report that one firm is facing a £10,000 fine for failing to register a change of name.

FPB says the firm, which did not want to be identified, was originally fined more than £30,000 under VAT notification liabilities contained in the Finance Act 1985 and later the VAT Act 1994. Following intervention from FPB's tax advisor Andrew Needham, the fine has been reduced to around £10,000.

The fine was imposed after the business changed from a partnership to a limited company - adding a 'ltd' to its name - without informing HMRC, despite it retaining the same VAT number. FPB says the firm had an exemplary record of VAT payments and submitting tax returns on time, and that HMRC did not lose out on any tax payments as result of the oversight.

Andrew Needham, of VAT Specialists Ltd, said: 'I am concerned that this is a change in HMRC's long-standing policy of waiving its technical ability to impose this penalty fine in such circumstances. If this is carried through and sets a precedent it could result in huge fines being imposed on small businesses which, in reality, have done very little wrong.'

'It is important that all small businesses are aware they could face steep fines unless HMRC is kept fully updated - but this heavy-handed approach is the very opposite of the support that is desperately needed at this difficult time and HMRC risks further alienating firms hit by its disproportionate, targeted business records checks regime and widely-reported poor levels of service.'

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