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HMRC internal manual

VAT Civil Penalties

Misdeclaration penalty: Discretion, reasonable excuse, and mitigation: Compassionate grounds

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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

When considering compassionate grounds such as illness, stress, death of a relative etc.

  • Consider the points in the first two bullets at VCP10762 
  • Was the event causing the distress unforeseen?
  • If it was foreseeable or had continued for some time, what contingency plans had been made?
  • How serious/debilitating was the problem? Was this an uncharacteristic error on the part of someone who had a long history of reliability?
  • If it is claimed that the error was caused by the death of someone close to the person compiling the VAT return, how closely involved were they? Try to establish the relationship between the two and then take a balanced viewpoint.
  • The activity of the registration cannot be an excuse in itself i.e. charities, non-profit making bodies. They are subject to the same consideration as any other VAT registered business.