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HMRC internal manual

VAT Civil Penalties

Belated Notification Penalty: Reasonable excuse: Trader states form requested but not sent

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

If a trader states that they have requested a VAT1 form from HMRC, by phone or letter, and claims the form has not been issued by HMRC, you should ascertain from the trader to whom in HMRC they allege they made the enquiry. If that business area has no record of the enquiry being made you should determine if the enquiry has been recorded on the Registration Unit, see VCP10435.

If the Registration Unit

  • keeps records of enquiries and the request cannot be traced you can refute any claim from the trader that the VAT1 form was requested, and
  • inform the trader that their request cannot be substantiated, and the belated notification penalty will be raised according to the normal rules.

If the registration Unit does not keep records of enquiries made you should consider allowing reasonable excuse on the grounds of postal difficulties provided the initial enquiry is alleged to have been made within the standard time scale, see VCP10433, and the second ‘follow up’ enquiry is made within 4 weeks of the alleged first enquiry.

If the enquiry is alleged to have made after the standard timescale for notification, see VCP10433, you should not normally allow reasonable excuse for the period prior to the alleged enquiry date.

However we could allow reasonable excuse (on grounds of postal difficulties) from the date of the trader’s alleged initial enquiry until the day before the second ‘follow up’ enquiry, provided the second enquiry is made within 4 weeks of the first alleged enquiry.

Reasonable excuse can be granted for the period following the second ‘follow up’ enquiry provided HMRC receives the VAT1 within 30 days of the second ‘follow up’ enquiry.

Reasonable excuse for a partial period - penalty is mitigated

A trader may be allowed reasonable excuse for the whole period they failed to notify or only for a partial period.

If reasonable excuse is allowed only for a partial period the penalty is mitigated and there is still a liability to the penalty.

The penalty letter should refer to mitigation rather than reasonable excuse to clarify the position.

Note: This is a developing area of policy. If traders ask for reconsiderations or appeal against our decision, you should contact Tax Administration, Litigation and Advice (TALA), see VCP10140.