Chapter 16 - Failure to Notify

Question 1

Introduction

Answer 1

When a trader is late notifying HMRC of VAT registration, three things happen:

1) his registration is backdated to the date from which he was liable to be registered
2) he must also account for output tax on supplies from the date on which he should’ve been registered. Credit for input tax can be given, if normal recovery rules were satisfied on purchases made in the same period
3) he is liable to a penalty for the period of default unless he can convince HMRC there is reasonable excuse for the delay

Question 2

Calculation of the Penalty

Answer 2

Calculated as % of lost revenue. Depends on type of behaviour and the type and quality of disclosure

Question 3

Non-Deliberate

Answer 3

Max penalty: 30%
Min w/unprompted: <12m - 0%, >12m - 10%
Min w/prompted: <12m - 10%, >12m - 20%

Question 4

Deliberate but not Concealed

Answer 4

Max penalty: 70%
Min w/unprompted: 20%
Min w/prompted: 35%

Question 5

Deliberate and Concealed

Answer 5

Max penalty: 100%
Min w/unprompted: 30%
Min w/prompted: 50%

Question 6

Other Points

Answer 6

Failure to notify penalties must be paid within 30 days, interest is chargeable thereafter
Penalties can be appealed
No penalties if there’s reasonable excuse

Question 7

Interaction with Other Penalties

Answer 7

Failure to notify penalty is reduced by the amount of any penalty calculated in respect of the same tax liability