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HMRC internal manual

Compliance Handbook

Penalties for Inaccuracies: How to Process the Penalty: Suspension of a penalty: Suspension conditions: Indirect tax example

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

We charged a penalty of £20,000 on company A in respect of a careless inaccuracy in its VAT return. On 22 June 2012 we suspended this penalty for 6 months, subject to the following conditions.

  • By 19 December 2012 the company will make changes to its business software that are sufficient to prevent similar inaccuracies in the future.
  • The company will ensure that its VAT sales and purchase data relating to all its business outlets is forwarded to, and checked and accounted for by, its accounts division before completion of the company’s VAT returns.
  • The company must file all necessary returns on time during the suspension period.

The first two conditions are specific conditions. The third is the generic condition. Although only the first two conditions will help company A avoid becoming liable to future penalties, at the end of the suspension period the company must satisfy us that it has complied with all three conditions otherwise the penalty will become payable.