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HMRC internal manual

Compliance Handbook

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HM Revenue & Customs
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Penalties for inaccuracies: calculating the penalty: delayed tax - Impact on potential lost revenue calculation: example - all tax declared late

You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.

Ben had an accounting system problem which resulted in a VAT invoice dated 30 June 2011 being incorrectly allocated to the 09/2011 return period rather than the 06/2011 return period. VAT of £150,000 was omitted from the 06/2011 return and included on the 09/2011 return without Ben taking any remedial action.

During an assurance visit on 12 December 2011, an officer discovered the £150,000 omitted from the 06/2011 return and included in the 09/2011 return. Ben accepted that he had failed to take reasonable care by not maintaining an adequate accounting system.

VAT of £150,000 has been declared later than it should have been. The inaccuracy was reversed in a later return without Ben having to do anything. The officer is satisfied that the inaccuracy satisfies Conditions 1 and 2 at CH82391 and is therefore a delayed tax inaccuracy. The potential lost revenue (PLR) is calculated following the rules for delayed tax at CH82392. The delay here is three months so the PLR for the penalty for the period 06/11 is 3/12 of 5% of the delayed tax inaccuracy.

PLR - £150,000 x 5% x 3/12 = £1,875