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HMRC internal manual

VAT Civil Penalties

Misdeclaration penalty: Discretion, reasonable excuse, and mitigation: Misunderstanding

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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

Where an assessment is not issued due to accepted misunderstanding, then the misdeclaration penalty (MP) and interest are no longer a consideration.

Where an assessment has been issued and it is later decided that the tax otherwise due is to be remitted on the grounds of misunderstanding, then the MP and interest are to be withdrawn.

Where an assessment is issued and misunderstanding is later conceded, but for whatever reason the trader decides to account for the tax, then the MP and interest are to be withdrawn.