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HMRC internal manual

VAT Civil Penalties

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HM Revenue & Customs
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Belated Notification Penalty: Belated Notification forms and letters: Letter 4

Belated Notification Penalty has been replaced by the Failure to Notify penalty introduced by Schedule 41 of the Finance Act 2008.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

Demand for tax arrears

NOTICE OF TAX ARREARS AND PENALTY

Personal and Confidential

Dear

I have to inform you on the basis of the information you have provided you were required to notify your liability to be registered for Value Added Tax not later than … and you were required to be registered for the period … to ….

Because you have failed to make the return(s) of Value Added Tax which you were required to make in respect of the period(s) from … to … in accordance with Regulation 25 of the Value Added Tax Regulations 1995 made under paragraph 2(1) of Schedule 11 to the Value Added Tax Act 1994, the Commissioners, by virtue of the powers conferred on them by Section 73 of the Value Added Tax Act 1994, assess the amount of tax payable by you in respect of the whole of the above period as being £….

Also, because of your failure to notify this liability at the proper time, you have rendered yourself liable to a penalty under Section 67(1) of the VAT Act 1994 at a rate of (insert appropriate rate)% of the net tax liability for the period from … to … or £50, if greater or where there is no relevant tax. HMRC have determined your net tax liability for this period to be £…. and, in accordance with the powers conferred upon them by Section 76(1) of the Act, assess you for a penalty in the sum of £….

You should forward the total amount to HMRC at the Birmingham Tax Accounting Centre forthwith in the reply paid envelope enclosed.

Instead of accepting this assessment you may make a single return and pay any tax shown on the return as being due. If you wish to do this you may obtain the appropriate form from this office. This should be completed and returned without delay together with the remittance to the address shown at the head of the form. Provided the return and remittance are satisfactory the Commissioners will withdraw this assessment.

You may also submit a statement of the relevant VAT covering the period of your liability for the late registration penalty. You must notify this office, within 30 days of the date of this letter, using the return envelope provided, of your net tax liability for the purposes of the penalty. If this information is not provided the penalty assessment notified above will stand.

For the purposes of establishing the relevant VAT for the penalty only, if you are required to account for any distance sales or acquisitions, for each acquisition and/or distance sale you have made you may deduct the VAT paid in another Member State up to the amount of UK VAT due on that supply. The VAT on the distance sales and/or acquisitions must be accounted for on the normal basis when completing your VAT return’.

If you make a return but the HMRC do not consider it satisfactory, you will be advised accordingly.

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 HMRC’s decision that you were required to be registered for the period stated and/or the liability to a penalty. You also have the right of appeal against the amounts assessed but only if you submit a VAT return declaring the amount of tax you consider to be due and this is acceptable to HMRC. 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*

*Delete as necessary