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HMRC internal manual

VAT Civil Penalties

Misdeclaration penalty: Calculation and notification of a misdeclaration penalty: Action to take on receipt of form D2211

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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

Step 1

Has the Group / Divisional Indicator been set at [2] or [TOGC], if

  • yes, go to Step 2
  • no, go to Step 3

Step 2

Refer to VCP10820 / VCP10821 or VCP10830. Take no further action.

Step 3

Has the previous weeks D2211 had the indicator set a [2] or [TOGC], if

  • yes, go to Step 4
  • no, go to Step 5

Step 4

Extract the previous penalty papers.

Was discretion used to withdraw previous penalty or was there a reasonable excuse which applies to the new error, if

  • yes, go to Step 6
  • no, go to Step 5

Step 5

Is there any reason to withdraw the penalty using discretion or a reasonable excuse exist for the error, if

  • yes, go to Step 6
  • no, go to Step 7

Step 6

Prepare a VAT643 and inhibit the misdeclaration penalty following the guidance in the AEC Assessment and Error correction manual in the section titled VAT643 Amendment of assessment form. Take no further action

Step 7

Are there any of the mitigating factors as shown in VCP10760, if

  • Yes, go to Step 8
  • No, go to Step 9

Step 8

Calculate the amount of mitigation manually and recalculate the penalty, then

  • go to Step 9

Step 9


  • VAT291 /651 (see VCP10814 / VCP10816
  • Letter for trader see section VCP10812 / VCP10813


  • Countersign VAT291 / 651 as per VCP10814 / VCP10816
  • Note the traders folder
  • Input VAT291 / 651