Penalties ― failure to notify ― calculating and assessing the penalty

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

  • Penalties ― failure to notify ― calculating and assessing the penalty
  • Reasonable excuse
  • Liable no longer liable concession
  • Calculating the penalty
  • Processing the penalty
  • Agents

This guidance note provides details of how the amount of the penalty will be calculated and collected by HMRC. This note should be read in conjunction with the Overview of the three penalties introduced from 1 April 2010, Penalties ― failure to notify ― overview and Penalties ― special reduction guidance notes.

CH73500
Reasonable excuse

Where a person has a reasonable excuse for a non-deliberate failure to notify, they will be required to ensure that they remedy that failure without unreasonable delay after the excuse ends. If the person can satisfy HMRC that they meet this condition, it will treat the excuse as continuing until the date the person notifies HMRC and no penalty will be levied.

CH71500

If the person fails to notify HMRC within a reasonable time limit, they will not have a reasonable excuse for the failure and a penalty will be levied by HMRC. A reasonable excuse is normally an unexpected or unusual event that is either unforeseeable or beyond the person’s control, and which prevents them from complying with an obligation to notify when they would otherwise have done.

A combination of unexpected and foreseeable events can be treated as a reasonable excuse when they are viewed together. HMRC will be expected to consider the actions of the person from the perspective of a prudent person who has exercised reasonable foresight and due diligence, having proper regard for their responsibilities under relevant tax legislation. If the person could reasonably have foreseen the event, whether or not it is within their control, then HMRC will expect the person to take steps to meet their obligations.

More information on what constitutes a reasonable excuse can be found in the Overview of the three penalties introduced from 1 April 2010 guidance note and CH71540.

However, HMRC will not accept that any of the following will

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