This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Compliance Handbook

Charging penalties: accounting for penalties: VAT Mainframe

Use the details from the assessment to complete a VAT292 (revised) to capture the penalty to the person’s account in the VAT Mainframe.

It is important to complete the VAT292 as soon as you issue the penalty assessment notice.

The VAT292 has a column in which to enter penalty codes for Schedule 24 and Schedule 41 penalties, which are

  • inaccuracy penalties corrected via a VAT641/642 - Penalty Code 58 
  • under-assessment penalties (late return and higher liability) - Penalty Code 59 
  • inaccuracies in returns subject to pre-payment credibility amendment - Penalty Code 60 
  • VAT Schedule 41 failure to notify penalties - Penalty Code 61,

For code 60 penalties enter the potential lost revenue and penalty percentage rate in addition to the penalty amounts.

Where the inaccuracy type is failure to take reasonable care you should indicate on the VAT292 whether the penalty is suspended or not.

Note: NPPS calculates the Penalty Percentage Rate (PPR) exactly to two decimal places, and the amount of the penalty to include pence. However, due to system discrepancies, the VAT Mainframe (VMF) input forms, which includes VAT292 and VAT641 cannot accept the exact figures provided by the NPPS.

Therefore, when completing the VAT forms the PPR and the amount of the penalty figure shown on NPPS must be rounded down to the nearest whole figure, for example 24.65% should be rounded to 24%.

The amount of penalty should always be rounded down to the whole pound, to prevent charging a higher penalty, for example £250.65 should be rounded down to £250.

After the VAT292 has been checked and authorised pass it to your VALID team. This will generate a new statement of account to the person. To minimise data security risks and ensure the most efficient transfer of information, electronic forms, where available, are to be used. The submission of electronic VALID forms should be by Electronic Folder (EF).

More detailed guidance on completing the VAT292 can be found in the VAT Input Supporting Document (Word 295KB).

Full lists of VAT Penalty Type Codes are located in SEES - VAT quick guide.

The path for this is SEES - Penalty Toolkit - Help & Guidance - VAT Input Form Quick Guides - VAT641 Quickguide.