FA 2007 s 97 and Sch 24 introduced a revised system of penalties in respect of inaccuracies made on documents sent by taxpayers to HMRC. The regime replaced, for the most part, the provisions in VATA 1994 relating to dishonest evasion of VAT (see V5.341), misdeclaration penalty and repeated misdeclaration penalty, as well as similar provisions relating to direct tax. The purpose of the change was to create, following the merger of the revenue departments, a single penalty framework for VAT, income tax, capital gains tax, corporation tax, PAYE, NIC and deductions made under the construction industry scheme. Further taxes subsequently came within the framework.
For the majority of VAT purposes the new regime came into force on 1 April 2008; however, in order to give taxpayers the opportunity to familiarise themselves with the new regime, no penalties were issued before 1 April 20091. It is important to note that the regime, insofar as it relates to VAT, only covers the specified documents listed below given to HMRC by a person (“P”).
Consequently, the regime, with except of the provisions relating to the neglect penalty (see below), does not apply to conduct involving dishonesty which does not relate to the giving of such a document to HMRC. As a result, VATA 1994 ss 60 and 61, whilst generally repealed, are retained in respect of conduct involving dishonesty which does not relate to an inaccuracy in such a document, or a failure to notify