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HMRC internal manual

VAT Civil Penalties

Misdeclaration penalty: Discretion, reasonable excuse, and mitigation: Unauthorised cash accounting

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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

  • Was the trader operating cash accounting for purchases as well as sales?
  • Would the trader have been given approval to operate the scheme had an application been made?
  • At the time of the error would approval have been given to use the scheme even though the turnover limits have now been exceeded?

If all the criteria above are met, the MP inhibit signal should be set.