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HMRC internal manual

VAT Civil Penalties

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HM Revenue & Customs
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Belated Notification Penalty: Calculation of a penalty: Supplementary assessment 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Belated Notification Penalty has been replaced by the Failure to Notify penalty introduced by Schedule 41 of the Finance Act 2008.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.

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.

Different rules apply depending on whether the period of lateness begins before or after 16 March 1988 or straddles 16 March 1988.

If the period of lateness begins and end’s before 16 March 1988 the penalty rate will be 30% of the relevant VAT due.

If the period of lateness begins before 16 March 1988 and ends after 16 March 1988 the penalty rate is 30% of the relevant VAT up to 15 March 1988.

From 16 March 1988 the penalty is

  • not exceeding 9 months - 10% of the relevant VAT due
  • exceeding 9 months but not exceeding 18 months - 20% of the relevant VAT due
  • exceeding 18 months - 30% of the relevant VAT due.

If the period of lateness begins on or after 16 March 1988, the rates are as above, 10%, 20%, or 30% depending on the period of lateness.

For periods straddling 16 March 1988 a calculation of relevant tax must be made up to the 15 March 1988 and another calculation made from 16 March 1988 and the penalty rates applied to each period.

If one period results in a repayment it may be offset against the net relevant tax in the other period in which it was incurred.

For all three periods the minimum penalty rule of £50 will apply if the total penalty is calculated to be less than £50.