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HMRC internal manual

VAT Civil Penalties

Misdeclaration penalty: Calculation and notification of a misdeclaration penalty: Assessment for divisional registrations

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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 divisions of a divisional registration are processed separately on the VAT mainframe system for the purposes of testing for susceptibility to a penalty.

This means that the reports D2211 and D2223 will be produced for any division where an officer assessment triggers the objective tests. The local office where the division is controlled will receive the outputs not the coordinating local office.

The law however, says that a penalty is chargeable where the taxable person has breached the objective triggers. The divisions of a corporate body are not taxable persons; the taxable person in a divisional registration is the legal entity.

On receipt of the report D2211 for a division the local office should note on the output “Divisional Registration” and file in the ‘divisions’ folder.