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HMRC internal manual

Compliance Handbook

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HM Revenue & Customs
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Penalties for failure to notify: in what circumstances is a penalty payable: single obligation to notify

Some obligations only need to be met once. For example, a trader usually only needs to tell us of their liability to be registered for VAT once. After that they will continue to be registered for VAT.

For taxes and duties with a single obligation to notify, the penalty provisions in FA08/SCH41 apply where there has been a failure to notify, see CH71220, on or after 1 April 2010, see CH71120.

In certain circumstances a trader may need to tell us about their liability to be registered for VAT more than once, see CH71261.

Example 1

If a trader is not already registered for VAT, they must notify HMRC that they are liable to be registered for VAT at the end of the month in which their taxable turnover for the previous 12 months exceeds the VAT threshold. This period of 12 months is fixed and so may include periods before the business started to trade. They have 30 days to tell us they are liable to be registered.

Jumana’s annual sales for the year to 31 March 2010 were £75,000. This is the first 12 month period in which they have exceeded the VAT registration threshold. She should have told us that she was liable to be registered for VAT by 30 April 2010. Jumana did not do so until 20 May 2010.

The obligation to notify arose in April 2010. The new penalty regime applies where the obligation to notify arises on or after 1 April 2010 so Jumana is liable to a penalty under the new provisions.

Example 2

Joe received a large order on 7 March 2010 for £100,000 which he will deliver by 14 March 2010. Joe will exceed the registration threshold within 30 days of becoming aware that the order has been made and the obligation to notify will cover the 30 day period from 7 March 2010 to 5 April 2010.

The obligation to notify commences on 7 March 2010, the day the expectation arises, and Joe will be liable to a penalty under the existing failure to notify regime (Section 67 VATA 1994) if he fails to notify HMRC by 5 April 2010.

If the order had been received on or after 1 April 2010 and Joe failed to notify HMRC within 30 days he would be liable to a penalty under Schedule 41 FA 2008.

Example 3

Joe is registered for VAT. On 7 March 2010 his business is transferred to Joe Ltd as a transfer of a going concern (TOGC). Joe Ltd is obliged to notify HMRC within 30 days starting from the day after the TOGC (8 March 2010). If Joe Ltd fails to notify HMRC of the liability to be registered within the 30 day period ending 6 April 2010 Joe Ltd will be liable to a failure to notify penalty under Section 67 VATA 1994.

If the TOGC had taken place on or after 31 March 2010 the obligation to notify would arise on or after 1 April 2010 and where the trader does not notify HMRC within 30 days they will be liable to a penalty under Schedule 41 FA 2008.

CH71280 explains the position where there may be repeated obligations to notify.

Example 4

Mary holds a licence for the sale of alcohol in the Golden Lion public house. She buys a refurbished dutiable games machine which she makes available to her customers for play on 1 August 2013. Because Mary is responsible for these premises for the purposes of machine games duty she has an obligation to register at least 14 days before she allows her customers to play on the machine. Following a compliance check we issue a compulsory registration notice on 31 October 2013. Mary is liable to a penalty under FA12/SCH24\PARA20. The PLR is the duty on the net takings from the machine during the period from the date play commenced to the date of registration.