Misdeclaration penalty: Discretion, reasonable excuse, and mitigation: Computer error
Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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.
The following questions should be addressed when considering reasonable excuse
- What checks took place between transcribing figures from the computer outputs to the VAT return?
- Did the error occur in a newly installed system, or an established system?
- If it was a new system, had the installation been well researched and supervised, or was it badly thought out and done too quickly?
- Were manual records being kept to test the accuracy of the new system?
- Was this a one off error or were there recurring problems?
- If it is an established system, had it been error free in the past?
- Was the problem a hardware/software error or simply an operator error?
- How well were the operators trained and how closely were they supervised?
How secure was the system from outside influences such as power cuts, and were there any procedures in place to test the system for corruptions after such an event?
- Was there a back-up system?
- Had the software been amended by the taxable person?