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HMRC internal manual

VAT Civil Penalties

Misdeclaration penalty: Discretion, reasonable excuse, and mitigation: Hire purchase

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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

  • Is the trader a regular user of HP transactions?
  • Has input tax been claimed prior to an actual tax point? If so has alternative evidence been used to apply a basic tax point?
  • If the point above applies, is evidence held to substantiate the date of delivery or payment of a deposit?
  • Has the finance company complied with the rules of establishing an actual tax point by issuing an invoice within the proper time scale?
  • Do the nil net tax concessions apply as announced at the 1991 budget?