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HMRC internal manual

VAT Civil Penalties

Misdeclaration penalty: Calculation and notification of a misdeclaration penalty: Action at coordinating local office

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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 co-ordinating local office should take manual action to obtain details of every assessment and voluntary disclosure for each period for which a penalty is to be considered.

To do this they should liaise with the local office for each division and ensure that any amendments to the assessments (including the setting of misdeclaration penalty MP inhibits signal) are taken into account before and after the penalty is assessed.

It is essential for the co-ordinating Local Office to continually monitor all the divisions for any changes which might affect the original imposition of penalty. 

To impose a misdeclaration penalty please take the following steps

  • Establish the declared GAT for all divisions for the relevant tax period;
  • Establish the GAT adjustments for all divisions for the relevant tax period;
  • Calculate the penalty liable amounts on all assessments issued to the corporate body for the relevant tax period;
  • Measure the penalty liable amounts against the GAT to see if the objective tests are met;

If the co-ordinating local office considers that the objective tests have been met and there are no mitigating circumstances to be taken into consideration, then action should be taken, see VCP10810, VCP10811, VCP10814 and VCP10816.