Commentary

V7.298B Other VAT penalties

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.298B Other VAT penalties

Part V7 Tax planning | Commentary

V7.298B Other VAT penalties

The penalty regime for failure to notify HMRC on time of the requirement to be registered for VAT was considered in detail in V7.142–V7.144. Earlier in this section the penalty regime for errors on VAT returns, the default surcharge regime and its replacement were considered. The following paragraphs provide a brief overview of other VAT penalties which advisers may come across from time to time.

Missing trader inter-community fraud (MTIC VAT fraud)

V7.313–V7.321 describe how MTIC VAT fraud works and the importance for traders of knowing their suppliers and customers. This section focuses on penalties that can be imposed on traders who get involved in MTIC VAT fraud.

As a general point any criminal fraud in relation to VAT can potentially result in a prison sentence of up to seven years and an unlimited fine. Criminal fraud in relation to VAT is where a person deliberately makes arrangements to evade VAT or to enable another person to evade VAT.

The level of penalty for a criminal prosecution in relation to VAT fraud depends on whether the conviction is a summary conviction in a Magistrate's Court or a conviction on indictment (a conviction before a jury) in a Crown Court. A conviction in a Magistrate's Court can result in a prison sentence of up to six months and a fine of up to £5,000, or three times the VAT evaded, whichever is greater. A conviction in a Crown Court can result in a prison sentence of up to seven years

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