sole trader account

[tapmadi]

if i open up a sole trader account will the tax man find out that the account is open, and at what point will have to pay VAT? say i have deposits of �5,000, going into the account every month will i be investigated..

[Buenchico]

It's an odd coincidence that you mention a figure of �5,000 per month as this equates to �60,000 per year which is exactly what the current VAT threshold is! i.e. if the goods or services you supply bring in less than �60000 per year you don't have to be VAT-registered. Above this figure you do. There are, of course, all sorts of complications to this apparently simple rule but all the details you need are here:
http://customs.hmrc.gov.uk/channelsPortalWebApp/channels PortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_Sh owContent&id=HMCE_CL_001222&propertyType=documen t
(NB: The rule with VAT is 'If in doubt, register'. If you register late you will probably have to pay a penalty).

It's best to be 'up front' with the tax man from the start. Sooner or later he'll find out about your business and its associated bank account. If it appears that you've been deliberately trying to hide income from the tax man it's quite likely that a prosecution will result.

Chris