Penalties ― breaches of the VAT provisions

Produced by Tolley
Penalties ― breaches of the VAT provisions

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Penalties ― breaches of the VAT provisions
  • VAT regulatory provisions
  • Are there any exceptions?
  • Calculating the penalty
  • Assessing the penalty
  • Breach of record-keeping requirements in respect of gold transactions
  • Breach of record-keeping requirements imposed by directions
  • Penalty for incorrect issue of a certificate
  • Amount of the penalty
  • Assessing the penalty
  • More...

This guidance note provides an overview of the penalties that could be imposed upon a person who breaches one of the following VAT provisions.

VAT regulatory provisions

This section provides details of the various breaches of the VAT regulatory provisions that could result in the imposition of a penalty.

If a VAT registered business ceases to make or have the intention of making taxable supplies it is required to notify HMRC within 30 days of the relevant date. Failure to notify HMRC within the required deadline will be treated as a breach of the relevant conditions.

If a business is VAT registered in the UK, in ‘respect of supplies that would have been taxable had they been made in the UK’ fails to notify HMRC within 30 days that the business has either:

  1. ceased to make or have the intention of making the specified supplies, or

  2. has formed or made an intention to make taxable supplies in the UK

VATA 1994, Sch 1, paras 10, 12

The business is in breach of the relevant conditions.

If a UK VAT registered business with no establishment in the UK ceases to have any intention of making taxable supplies or ceases to make taxable supplies, and it fails to notify HMRC within 30 days of the relevant date, the businesses will have breached the relevant provision.

If a business established in another member states is registered in the UK in respect of distance sales made to UK customers and the business fails to notify HMRC within 30 days that the:

  1. business has ceasedto be liable to registration

  2. business has ceasedto be entitled to registration

  3. business has ceasedto have the intention which resulted in the request for registration

  4. business has fulfilled the intention to make the option or supply which resulted in the request for registration, or

  5. business’ option to treat relevant supplies as taking place outside another member state has ceasedto have effect

VATA 1994, Sch 2, paras 3, 4,

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