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HMRC internal manual

Compliance Handbook

Penalties for VAT and Excise Wrongdoing: In what circumstances is a penalty payable: What periods are penalties charged for

A penalty for a VAT, Excise and Landfill Tax wrongdoing listed in CH91200 is charged for a tax period or a penalty period.

Person registered with HMRC

If the person liable to the penalty is registered with HMRC for the tax or duty concerned, the tax or duty is assessed on the basis of tax periods. The penalty is also based on tax periods. A tax period is an accounting period.

Person not registered with HMRC

If a person is not registered with HMRC for the tax or duty concerned and

  • makes an unauthorised issue of an invoice showing or including VAT, the penalty period will be the date of the invoice. A person is legally liable to a separate penalty for each invoice showing or including VAT. The liability to separate penalties must be clearly noted on internal HMRC systems and explained to the person in any correspondence
  • misuses a product in a way that attracts a higher amount of excise duty, the penalty period will be the date of the act which enabled the assessment to be made. A person is legally liable to a separate penalty for each act of misuse
  • supplies a product knowing that it will be used for a purpose that attracts a higher rate of duty, the penalty period will be the date of the supply which enabled the assessment to be made
  • handles goods subject to unpaid excise duty, the penalty period will be the date on which the goods were handled. If there is more than one date, the penalty period starts on the first and ends on the last date the goods were handled
  • makes, knowingly causes, or knowingly permits a disposal of material at an unauthorised waste site, the penalty period will be the date of the unauthorised disposal. A person is legally liable  to a separate penalty for each act which enables HMRC to assess an amount as landfill tax.