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HMRC internal manual

VAT Civil Penalties

Misdeclaration penalty: Factors that may affect the penalty: Deregistered traders

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after 01/04/2009. Misdeclaration penalty will still apply where the due date is before 01/04/2009.

Please see the Compliance Handbook CH80000 Penalties for Inaccuracies for further details.

Misdeclaration penalty MP

Where a trader has deregistered and the date of deregistration is back-dated, the situation may arise where an MP has already been issued for a period which falls after the new deregistration date. MP is not appropriate for such periods and action should be taken to withdraw any penalty previously applied.

Repeated misdeclaration penalty MP(R)

MP(R) is not considered to be appropriate for periods after the date of deregistration. This means that assessments for traders who have deregistered will not cause the issue of a new penalty liability notice (PLN).

Where a cancellation is to be issued and the last period in the 5 period span (not including the “current” period) is the trader’s final period, the computer will be unable to establish the start date of the warning period to be withdrawn and VISION will still show the legend “PLN Live”.

On such rare occasions the following message will be produced on the cancellation notice:

“As you have now deregistered, this notice cancels the LATEST warning issued. If you have received other warnings and are unsure which notice has been cancelled, you should contact your local VAT office for advice.”