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HMRC internal manual

Compliance Handbook

Charging penalties: introduction: penalties for VAT or excise wrongdoing - FA08/Sch41

Whenever you discover a VAT or excise wrongdoing that has resulted in any Potential Lost Revenue (PLR), see CH94200, you must establish the behaviour that led to it to determine if the person is liable to a penalty. A penalty will be payable unless the person has a reasonable excuse for the failure, see CH92000.

You should be familiar with the contents of the technical guidance that starts at CH90000, which sets out what taxes and tax periods FA08/Sch41 applies to, in what circumstances a penalty is payable, and who is liable to pay it.

This guidance is about how you calculate and charge penalties.

FA08/Sch41 penalties must be recorded and authorised on the National Penalty Processing System, see CH407500.