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HMRC internal manual

VAT Civil Penalties

HM Revenue & Customs
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Belated Notification Penalty: Reasonable excuse: Legal provisions for reasonable excuse

Please see the Compliance Handbook CH70000 for more details about the new failure to notify penalty.

The VAT Act 1994, which introduced civil penalties, included a provision for ‘reasonable excuse’. If HMRC are satisfied that that the trader has a reasonable excuse no liability to a belated notification penalty will arise

HMRC or the tribunal may also withdraw a penalty which has already been issued if a reasonable excuse can be established for the trader having failed to notify HMRC at the proper time

The VAT Act 1994 does not comment on what constitutes grounds of reasonable excuse, except that the following can not be considered to be reasonable excuse

  • an insufficiency of funds to pay any tax due
  • reliance placed on any other person to perform any task, or slowness or inaccuracy by that person.