If you would like to weigh up the pros and cons of submitting a VDA in order to avoid incurring financial penalties, due to overdue taxes that your business may have forgotten to pay, listed below is a handy guide that contains some of the pros and cons of negotiating a VDA for your business. Which may help you decide whether or not a VDA is a smart move for your specific circumstances. As an example, VDA’s often have more benefits for small to medium-sized businesses, who may be adversely affected by being made to pay steep financial penalties which they may not have budgeted for in their current business plan.
The advantages of submitting a VDA:
You are encouraged to negotiate the terms of your agreement:
One of the advantages of submitting a VDA is that you can actually negotiate the terms of your agreement. For example, you may want to stipulate that you will come clean about an error that you made with your taxes and have discovered in order to have your penalties waived if you pay back your backdated taxes back in full with interest. If you can prove that you weren’t trying to dodge tax, it’s highly likely that the terms of your agreement will be accepted.
It’s evidence that your business wishes to be compliant:
In order to maintain your business’ credibility, it’s a great idea to file a least one VDA every decade in order to show authorities that you’re serious about being transparent about your business’s operations and finances.
You should be able to avoid paying penalties:
As you may already know, the number one reason to use a VDA is to avoid paying late penalties and fines on your existing overdue tax. Although do keep in mind that you will still be required to pay your taxes as well as any interest which is applicable in your circumstances.
The disadvantages of submitting a VDA:
In some cases you may not receive financial penalties for failing to disclose your taxes:
If your business’s taxes are audited and it’s clear to the auditor who has been appointed to assess your business’ financial accounts that you have not tried to hide any information, your auditor may very well choose to waive any penalties which you may be eligible for. So if you can afford to pay any financial penalties which you may be handed, forgoing submitting a VDA may be an option that you may want to consider. Although to be on the safe side and for your peace of mind, it may be a wiser option to go ahead and apply to submit a VDA to square up your taxes and to prove that you’re willing to comply with the law.
So after you’ve weighed up the pros and cons of using a VDA to handle the issue of any backdated taxes which you may be worried about. Particularly taxes that haven’t been paid in the past 3-4 years, hopefully, you are able to make a wise fiscal decision.