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HMRC internal manual

VAT Civil Penalties

Belated Notification Penalty: Calculation of a penalty: Penalty rates

Belated Notification Penalty has been replaced by the Failure to Notify penalty introduced by Schedule 41 of the Finance Act 2008.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

Penalty rates are covered by the VAT Act 1994, Section 67, subsection (4). All penalty assessments made on or after 1 January 1995 must be based on the following percentages

  • not exceeding 9 months - 5% of the relevant VAT due
  • exceeding 9 months but not exceeding 18 months - 10% of the relevant VAT due
  • exceeding 18 months - 15% of the relevant VAT due.

A minimum penalty of £50 applies where the penalty is calculated at less than £50 or where there is no relevant VAT.

Note: If a supplementary penalty assessment is made to increase a penalty assessment made before 1 January 1995 it should be based on the rates in force prior to 1 January 1995, see VCP10456.