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HMRC internal manual

VAT Civil Penalties

Discretion, reasonable excuse and mitigation: Discretion

When deciding whether or not to serve a Penalty Liability Notice (PLN) or impose a penaltyfor failure to submit an EC Sales statement, you may exercise discretion. However, youmust make sure you

  • maintain equity in the issue of PLNs and in the application of civil penalties
  • take full account of the circumstances of the particular case
  • keep in mind that the fundamental objective of civil penalties is to encourage trader compliance.

Provided there are sound reasons for doing so you can exercise discretion not to imposea penalty. Nevertheless it is likely to be the exception rather than the rule, the casepapers should

  • record the reasons for the decision, and
  • must be endorsed by the line manager.

Discretion is provided for in Section 66(2) AND Section 76 of the VAT Act 1994.