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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Debt and return pursuit: new penalties processes for DMB: VAT penalties

Penalty assessment

Any underpaid tax is recovered by assessment and the compliance caseworker uses NPPS to issue a formal penalty assessment for penalties. The VAT Registration number (VRN) is used for these penalties.

Please note that VAT penalties are not raised on SAFE. They are raised manually as a charge on the VAT Mainframe (VMF) using form VAT292.

Penalty Charge on VAT Mainframe

A statement of account and payslip quoting the VAT Registration number are produced and issued to the trader by VMF. Penalty codes (58 - 63) identify the penalty type based on the behaviour that led to the penalty. If unpaid the penalty is downloaded to IDMS.

IDMS

VAT penalties are downloaded to IDMS. The HoD type ‘B’ applies to these penalty work items.

Suspended penalties

The legislation allows for penalties due to inaccuracy incurred due to careless behaviour to be suspended for an agreed period of no longer than 2 years. The taxpayer must agree to certain conditions to address the behaviour that led to the penalty. Suspended penalties are not collectible and therefore not passed to DMB for pursuit unless the taxpayer fails to meet the conditions.

VAT Mainframe partial suspension

The VAT Mainframe does not support part suspensions.

VAT Mainframe release of suspended penalties

A suspended penalty for a VAT Registered case is entered on to VAT Mainframe but is given an indicator signal to clearly show that the debt is suspended.

The charge is held within VMF as a non-posted item, ensuring that the charge does not appear within the Ledger.

If the trader fails to comply with the terms of the suspension, the signal is changed, to identify the item as a posted item and release the charge onto the Ledger.

A statement of account and payslip are produced and issued by VMF.

Enforcement

You can enforce these penalties using the County Court Bulk Centre (CCBC).

Company officer liable cases

Where a penalty is assessed against a company the legislation allows that an officer of the company can be made liable for all or part of the penalty. Where Compliance determines the company officer is liable for all or part of the penalty, they will notify the company officer in writing (on the personal liability notice NPPS8A).

Where the company officer is liable, the penalty assessment remains against the company. To ensure Debt Management pursue the company officer, Compliance will manually notify Debt Management of the cases via the relevant head of duty Single Point of Contact (SPoC).

Temporary guidance is in place with the head of duty SPoCs to deal with these cases. This guidance will be updated in due course.