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HMRC internal manual

Compliance Handbook

Penalties for VAT and Excise Wrongdoing: How to process a penalty: Raising a penalty assessment

Once a person has become liable to a penalty for a VAT or Excise wrongdoing, see CH91200, we will send them a penalty assessment.

This will tell the person what they owe and when they must pay it. The penalty assessment is enforceable in the same way as an assessment to tax.

Before you issue the penalty assessment you must decide

  • the wrongdoing(s) the penalty relates to
  • the amount of the penalty, see CH95550.

A penalty assessment may be combined with an assessment to tax or duty.

A penalty for handling goods subject to unpaid excise duty, see CH91550, is not dependent on the ability to raise a corresponding assessment to duty.

Where the penalty relates to the unauthorised issue of a VAT invoice, see CH91350, any reference in this guidance to an ‘assessment to tax’ includes a ‘demand for recovery as a debt due to the Crown’.

For example

An unregistered trader issued invoices charging VAT to customers. We cannot raise an assessment to recover the ‘VAT’ because the amounts involved are not VAT. In these circumstances the amount representing the ‘VAT’ charged on the invoices would be dealt with by a demand for recovery, not an assessment.