Calculation and notification of the penalty: What to do when a trader fails to submit EC Sales List
The purpose of the penalty is to encourage traders to submit their EC Sales Lists (ESLs) on time to ensure the completeness of the VAT Information Exchange System (VIES) database.
In some instances traders complete their VAT returns incorrectly. They may put inappropriate entries in Box 8 of their VAT100 return, which suggests that the trader has an obligation to submit an EC Sales list.
Before you initiate any penalty action it is important to check the trader’s status to satisfy your self that the trader does indeed have an obligation to submit EC Sales lists. The issue of a tick box enquiry should clarify this issue, see VCP10956.
A penalty can only be applied to those traders who have an obligation to submit an EC Sales List and have failed to do so.
Traders are not obliged to submit nil EC Sales lists and therefore cannot be in default if the list they have failed to submit is a nil list.
Where we have allowed individual group members to submit separate ESLs, and one of those members fails to submit a statement when required to do so, the default is not a failure to submit an ESL, but rather that of a material inaccuracy.
For the initial action you must take, see VCP10942.
Once you have identified a trader in default and decided to take action for non-compliance you must follow a set procedure see VCP10945.
A Penalty Liability Notice, see VCP10950, should be served,which specifies the ESL period in default and advises the trader that
- no action will be taken if the default is remedied within 14 days
- if the default is not remedied within 14 days then there will be a liability to daily rate penalties in respect of the default
- in the event of a further default within 12 months of the last one , the trader will become liable to further penalties without any further notices being served.
Following the issue of a Penalty Liability Notice (PLN) you should carefully monitorthe trader’s compliance and apply further penalties increasing in value when appropriate.