Misdeclaration penalty: Calculation and notification of a misdeclaration penalty: Action at the penalty process seat
Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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.
Penalty process procedure table
Obtain relevant trader’s folder or penalty folder in the case of large traders
If the D2211 report shows the group/division indicator set, check the registration details on VISION. If the indicator is “2” the trader is part of a divisional registration and action should be taken, see VCP10820.
Transfer of a going concern (TOGC)
If the D2211 reports that the trader has been subject to a transfer of going concern (TOGC) then action should be taken, see VCP10830.
Check the folder for any reasonable excuse, see VCP10760, applicable to the cases appearing on the new report. If found prepare a VAT 643 to inhibit MP.
Consider whether mitigation is appropriate, see VCP10793.If mitigation is approved, manually re-calculate the penalty as appropriate, noting the traders folder accordingly. You may need to check VISION first for the detail of the assessment if, for instance, only part of the assessment is to be mitigated, or if you wish to apply different mitigation amounts on different lines of the assessment. If the result of the mitigation is a penalty of less than £30, you should consider whether it is worth maintaining at all.
Notify the trader except in cases where no penalty is to be issued. Send VAT 291 or VAT 651 for VALID input on the computer.
Check the ledger to ensure input has been processed.
If a penalty is not to be issued the reasons should be noted in the traders folder and the decision countersigned by another officer. Penalty papers should be filed by VAT period and a penalty summary sheet maintained for easy reference, especially with very active traders whose penalty is regularly amended, see VCP10822.