Misdeclaration penalty and repeated misdeclaration
This notice cancels and replaces Notice 700/42 (June 2011).
1.1 What is this notice about?
This notice explains how we calculate and notify two penalties, both of which were specifically designed to encourage businesses to submit accurate VAT returns—
— Misdeclaration Penalty (MP)—which deals with large misdeclarations, and
— Repeated Misdeclaration Penalty (MP(R))—which deals with large, repeated misdeclarations.
These penalties do not imply any dishonesty or any intention to evade tax. You can find further information about the separate penalty for conduct involving dishonesty in Notice 160 “Compliance checks into indirect tax matters”.
The notice also describes how you can appeal against the liability to penalty or the amount of penalty.
This notice has been amended to include references to the new penalties for inaccuracies in tax returns and documents which replaces MP and MP(R) (see para 1.3), as well as changes to the de minimis limits for correcting errors discovered on VAT returns already submitted. Other procedural updates have also been made.
This notice does not have force of law but it explains how we interpret the relevant sections of VATA 1994.
— Section 63—misdeclaration penalty.
— Section 64—repeated misdeclaration penalty.
— Section 70—the basis for mitigation.
— Section 71—the exclusions from reasonable excuse provided for in sections 63 and 64.
1.3 New penalties for inaccuracies in tax returns and documents
MP and MP(R) have been replaced by new penalties for inaccuracies in tax returns and documents. The new penalties apply from 1 April 2008, but only for returns