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HMRC internal manual

VAT Civil Penalties

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Belated Notification Penalty: Mitigation: Action to take when mitigation is appropriate

Belated Notification Penalty has been replaced by the Failure to Notify penalty introduced by Schedule 41 of the Finance Act 2008.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. 

If you are aware of mitigating factors before the penalty is issued you should establish the amount of the penalty but do not issue it until the mitigation considerations have been completed.

Remember the exclusions for mitigation, see VCP10446 

If mitigation is appropriate the Officer’s line manager must write to the trader, the letter must state

  • the full amount of the penalty due
  • the amount to which it has been reduced, and
  • all the circumstances which have been taken into account in reaching the decision.

Note: This is important in case the trader appeals to the tribunal.

The trader must be told of his right to appeal against the penalty to the tribunal.