V5.358 Failure to disclose avoidance schemes (prior to 1 January 2018)

Introduction

Businesses which use or market VAT avoidance schemes are required to disclose such schemes to HMRC¹. This paragraph describes the penalties for the failure to disclose avoidance schemes under the disclosure scheme which operated prior to 1 January 2018 (for which see V5.213E). For penalties for failure to disclose under the scheme which operates from that date (for which see V5.213), see V5.358A.

The schemes in question are “notifiable schemes”, which may or may not be “designated schemes”.

Penalty

Where a person fails to comply with the requirement to disclose an avoidance scheme, he is liable to a penalty of²—

1.  

   (a)     in the case of a designated scheme, 15 per cent of the “VAT saving”; or

2.  

   (b)     in the case of a notifiable scheme which is not a designated scheme, £5,000.

For the purpose of a penalty under head (b) above, “VAT saving” means³—