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HMRC internal manual

VAT Civil Penalties

Misdeclaration penalty: Calculation and notification of a misdeclaration penalty: Penalty assessments for transfer of going concern

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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

On receipt of D2211 marked ‘Pre-TOGC’ you must establish the date of transfer, then follow the action guide below.

Step 1

Is the penalty after the transfer of going concern (TOGC). Including the period in which the transfer occurred, if

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

Step 2

Process the penalty in the normal way. Take no further action.

Step 3

Is the penalty a new or increased amount, if

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

Step 4

Mark the D2211 ‘Pre-TOGC’, see VCP10753. Take no further action.

Step 5

Recalculate the penalty. Was the penalty paid, if

  • yes, go to Step 6
  • no, go to Step 9

Step 6

Make reasonable attempts to contact transferor to repay monies. Have you made contact, if

  • yes, go to Step 7
  • no, got Step 8

Note: If local knowledge, including enquiries of the transferee cannot establish an address for the transferor, no further action need be taken.

Step 7

Authorise a manual repayment of the penalty due to the transferor. Under no circumstances should the transferee’s ledger be amended. Take no further action.

Step 8

Mark D2211 ‘Pre-TOGC, period no contact with transferor - no further action, see VCP10753.

Step 9

Take action to reduce the penalty debt on file.