Other penalties

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Other penalties
  • Import VAT errors
  • Errors in taxpayers’ documents
  • Penalty for participating in VAT fraud
  • Disclosure of tax avoidance schemes: VAT and other indirect taxes
  • Serial tax avoidance
  • Corporate offence of failure to prevent the facilitation of VAT fraud

This guidance note provides an overview of other penalties that can be imposed by HMRC that are not covered in the other notes in this subtopic.

See the Penalties ― summary of penalties that can be applied guidance note and Flowchart ― overview of the current VAT penalty regimes for an overview of all of the penalties that can be imposed by HMRC from a VAT and indirect tax perspective.

For more information on the three penalties introduced from 1 April 2010, see the Overview of the three penalties introduced from 1 April 2010 guidance note.

Import VAT errors

Import VAT is VAT chargeable and paid on goods imported into the UK from non-EU countries. It is calculated and paid based on the information provided on import documentation.

CH81021; VATA 1994, s 1(4); FA 2007, Sch 24, para 1(4)

Penalties for inaccuracies in the amount of import VAT declared are charged under FA 2003, Part 3. However, subject to the usual recovery rules, import VAT is recovered as input tax on the importer’s VAT return. If a business claims too much import VAT or submits a claim too early, the business may be liable for a penalty for that inaccuracy under FA 2007, Sch 24.

Businesses can also be subject to a penalty for evading import VAT where:

  • the person engages in any conduct for the purpose of ‘evading import VAT’, and
  • his conduct involves dishonesty (whether or not to give rise to any criminal liability)

He is liable to a penalty equal to ‘the amount of import VAT evaded’ (or sought to be evaded). However, where by reason of such conduct, he is:

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