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HMRC internal manual

VAT Civil Penalties

Belated Notification Penalty: Mitigation: Legal provisions for mitigation

Belated Notification Penalty has been replaced by the Failure to Notify penalty introduced by Schedule 41 of the Finance Act 2008. The Failure to Notify penalty applies to obligations to notify HMRC of a liability to be registered for VAT on or after 01/04/2010. The Belated Notification Penalty under Section 67 VATA 1994 continues to apply to obligations to notify a liability to be registered for VAT before 01/04/2010.

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


The VAT Act 1994, Section 70 gives HMRC and the VAT Tribunal power to mitigate certain penalties including a penalty for late registration or a material change in or alteration in the nature of a trader’s supplies.

The law does not allow the following factors to be taken into account for mitigation

  • insufficiency of funds to pay the VAT or penalty due
  • the fact that no VAT has been lost, or
  • the fact that the trader has acted in good faith.

Tribunals have taken into account whether there are extenuating circumstances where the trader can be considered not to be wholly responsible for the belated notification.

The leading case for mitigation is T R Jordan LON/94/0716, for further guidance on mitigation, see VCP10447 and VCP10448.