Commentary

V5.348 Failure to notify event affecting exemption from registration

Part V5 Compliance, enforcement and appeals

V5.348 Failure to notify event affecting exemption from registration

V5.348 Failure to notify event affecting exemption from registration

This paragraph deals with the penalty for the failure to notify an event affecting a person's exemption from registration.

Provisions applicable until 31 March 2010

The provisions relating to failure to notify such an event were changed with effect from 1 April 2010. However, the pre-existing provisions still apply where the obligation to notify arose prior to 1 April 2010. Given that HMRC may assess tax and penalties for 20 years where a deliberate failure gives rise to a VAT loss, a description of the earlier provisions has been retained.

Liability to a penalty

(i) Person making zero-rated supplies

A person may be exempted from registration under VATA 1994 Sch 1 if he satisfies HMRC that any taxable supply he makes is zero-rated1. If exempted, he must notify HMRC of any material change in the nature of his supplies or any material alteration in the proportion of taxable supplies in any quarter that are zero-rated2. He is liable to a penalty if he fails to do so3.

(ii) Person making zero-rated acquisitions

A person may be exempted from registration under VATA 1994 Sch 3 if he satisfies HMRC that any relevant acquisition would be an acquisition in pursuance of a transaction which would be zero-rated if it were a taxable supply made by a taxable person4. If exempted, he must notify HMRC if he makes any relevant acquisition in pursuance of any transaction which would be charged to tax at the standard rate if it were a

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