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HMRC internal manual

VAT Civil Penalties

HM Revenue & Customs
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Belated Notification Penalty: Belated Notification forms and letters: Letter 2

Belated Notification Penalty has been replaced by the Failure to Notify penalty introduced by Schedule 41 of the Finance Act 2008.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

Previously exempt trader who is required to be registered

Personal and Confidential


On … you were granted exemption from registration on the basis of the information you provided at the time.

HMRC have now learned of a change in your original trading circumstances which made you no longer eligible for exemption, and they consider that you were therefore required to be registered for Value Added Tax with effect from

You are required to pay any outstanding tax due whether or not you have expressly charged tax to your customers. The first tax return you will receive from the VAT Central Unit in due course will cover a period which commences on your effective date of registration, ie (insert date) … and you should on that return account for, and at the same time pay, all the tax due on supplies made from that date, up to the end of the period shown on your certificate of registration.

The return is in no circumstances to be altered to allow for payments already made, but you should complete the return for the full period, enclose a letter giving details of earlier payments and pay the balance of any tax still due.

As mentioned in the Notice of Exemption dated … which was issued to you, you were required under the law to notify immediately any material change in the circumstances affecting your exemption. Your failure to notify this change at the proper time has rendered you liable to a penalty under Section 67(1)(a) of the Value Added Tax Act 1994 (as amended) at a rate of (insert appropriate rate) of your net tax liability for the period from … to …, or £50 if greater or where there is no relevant tax.

You should notify this office, within 30 days of the date of this letter using the return envelope provided, of your net tax liability for this period. If this information is not provided as requested HMRC will, under the powers conferred on them by Section 76(1) of the act, assess you for a penalty based on the best evidence of your net tax liability available to them.

If you disagree with a decision made by HMRC you can ask for it to be reconsidered. You should do this if you can provide further information, or there are facts which you think may not have been fully taken into account.

If you are still not satisfied you may be able to appeal to an independent VAT and Duties Tribunal. Whether or not you have asked for a reconsideration you have the right of appeal against the Commissioners’ decision that you were required to be registered for the period stated and/or the liability to a penalty. You will find out more about the appeal procedure in the leaflet ‘Appeals and Applications to the Tribunals’ which is issued by the President of the VAT and Duties Tribunals. Copies of the leaflet and forms for making an appeal can be obtained from any VAT and Duties Tribunal Centre or the VAT Helpline (telephone 0300 200 3700).

If you wish to request a reconsideration or submit an appeal to a Tribunal in relation to any decision of HMRC notified in this letter you must do so within 30 days from the date of this letter.

yours #faithfully/sincerely

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