FLEDGLING businesses in south Hampshire have been given a rare stay of execution over registering for dreaded VAT.

Customs and Excise will not issue penalties to any local enterprises that should have already registered for VAT.

However, they must do so before the end of September this year.

If a business's taxable turnover - not just the profit - is more than £56,000 per year (about £1,100 per week or £4,700 per month) they have to register for VAT.

In a move to support and assist businesses in achieving compliance, a one-off scheme has been introduced by Customs and Excise to encourage businesses that are trading above the VAT threshold to register for VAT.

Normally if they do not register when they should, businesses have to pay a Belated Notification Penalty, which is based on a percentage of the tax that would have been paid on sales made after they should have registered.

Under the scheme, any business that voluntarily applies to register for VAT between now and September 30 will not have to pay the penalty, as long as they help Customs work out when the business should have been registered.

VAT (Value Added Tax) is a tax on the final consumption of certain goods and services in the home market but is collected at every stage of production and distribution.

Amanda Spencer, a spokeswoman for HM Customs and Excise, said: "Customs and Excise are aware that many businesses applying to register will have arrears of tax, and we will still expect these to be paid in full. However, we will be willing to discuss arrangements for the payment of any VAT due.

"In addition to supporting and assisting businesses in achieving compliance, the scheme aims to reduce their costs and to create a level playing field for all."

For more information, contact the Customs & Excise National Advice Service on 0845 010 9000 or visit the Customs & Excise website www.hmce.gov.uk.