BUSINESSES in the region have been set a deadline by which to register for VAT - with Customs and Excise threatening to "crack down hard" on those which fail to do so.

Firms with a taxable turnover of more than £56,000 a year have less than a month to register for VAT or face fines of more than £1,000.

But any firm that voluntarily registers before September 30 and helps officers to work out when they should have registered, will not be fined.

Rob Hastings Trew, Customs and Excise spokesman for the North of England, said: "It is impossible to know exactly the size of the black economy.

"The number of businesses that have come forward since we launched the self-notification initiative in April has been very encouraging, with each business saving themselves an average of £1,000 in penalties.

"But businesses that don't come forward and help us to work out what they owe in arrears will face penalties in excess of £1,000, depending on the amount they owe.

"We don't want to be heavy-handed with businesses and if they ask for help we will provide it. We want to make it easier and cheaper for business to meet their tax obligations and create a level playing field on which all compliant businesses can compete.

"However, after September 30, we intend to crack down hard on those who have chosen not to take up this opportunity."

But Service Network, an organisation dedicated to supporting the professional service sector in the region, hit back saying the tactics of Customs and Excise could affect many smaller businesses.

Tracey Bransby, executive director of the network, said: "Threatening businesses with a fine is heavy-handed by the Government.

"It should be doing more to cut the amount of red tape faced by business, not making them jump through hoops.

"A lot of the businesses affected by this move will be lifestyle business, the sole traders such as hairdressers and plumbers selling their skills to the public. They spend so much time just doing their job, that they don't have time to wade through endless paperwork.

"The Government should be encouraging more people to establish a business rather than putting up more barriers to their success."

For details, contact the Customs and Excise National Advice Service on 0845 010 9000, or visit the Customs website at www.hmce.gov