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HMRC internal manual

Compliance Handbook

From
HM Revenue & Customs
Updated
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Penalties for VAT and excise wrongdoing: in what circumstances is a penalty payable: when is a penalty chargeable

A penalty is chargeable if a person

  • makes an unauthorised issue of an invoice showing or including VAT, see CH91350, or
  • misuses a product listed at CH91500 in a way that attracts a higher amount of excise duty, see CH91400, or
  • supplies a product listed at CH91500 knowing that it will be used for a purpose that attracts a higher rate of duty, see CH91450, or
  • handles goods subject to unpaid excise duty, see CH91550.

However, we cannot charge a penalty where the person has a reasonable excuse, see CH92000, for non-deliberately

  • issuing the invoice, or
  • misusing the product, or
  • handling the goods.

There cannot be a reasonable excuse for supplying a product knowing that it will be misused.

There is no liability to a wrongdoing penalty, where goods have been seized at importation from outside the EU. This is a consequence of the ECJ judgement in Dansk. In these cases the person may be liable to a civil evasion penalty, under section 8 of the Finance Act 1994.

FA08/SCH41/PARA2

FA08/SCH41/PARA3

FA08/SCH41/PARA4

FA08/SCH41/PARA20