The Sun recently reported that Vince Cable, the Government's Business Secretary, suffered the embarrassment of having to pay £15,000 in VAT arrears plus a £500 penalty, after failing to register for VAT in respect of freelance income during the year ended 5th April 2010.
Mr Cable earned £50,998 from his media and speaking engagements in the year ended 5th April 2009, which was below the VAT registration threshold. This income was in addition to his MP's salary of £65,738. In 2009/10 however his freelancing income rose to six figures, estimated by The Sun to be between £127,000 – £154,000. This included an appearance on 'Strictly Come Dancing' for which he received £10,000 although he did donate this to charity. As his income exceeded the VAT threshold Mr Cable was compelled to register for VAT but failed to do so.
When preparing Vince Cable's self assessment tax return for the year ended 5th April 2010, his accountants discovered the oversight and promptly disclosed this to HMRC with an immediate offer of settlement, which was duly accepted. The settlement amounted to approximately £15,000 plus a penalty of £500, which had been reduced by 50% for unprompted disclosure and full co-operation, and was finalised within a month of originally notifying the Revenue.
The red top newspaper commented that the political fallout for a minister who has taken a hard line on clamping down on tax evasion will be devastating and its lead comment on the story read, “Since he's so hopeless at managing his own affairs, what on earth is this buffoon doing in the government?”