Calculation and notification of the penalty: Calculation of the penalty
The penalty is calculated on a daily basis for a maximum of 100 days. The penalty rate increases with each default up to a maximum amount of £15 per day. A minimum penalty of £50 applies.
If the trader fails to submit the EC Sales List (ESL) specified in the Penalty Liability Notice within the period of 14 days allowed, they are liable to a penalty from the fifteenth day after the service of the notice.
For all subsequent defaults the trader is liable to penalty from the day immediately following the due date.
The penalty rates and penalty liable periods are provided for in Sections 66 (2), 95) and (6) of the VAT Act 1994.
Penalty for first default
The trader is liable to a penalty of £5 per day for the first default.
The start date for the penalty is determined from the date of issue of the Penalty Liability Notice (PLN).
The trader is allowed 14 days in which to remedy the default to which the notice relates.You should calculate the penalty from day 15 until either the date the ESL is received or 100 days have elapsed whichever is the sooner.
If the trader submits the ESL to which the PLN relates within the 14 days allowed then that default has effectively been remedied and the next default is regarded as the first and as such will attract a £5 per day penalty
Penalty for subsequent defaults
The 14 days ‘period of grace’ allowed for the trader to remedy the default that triggered the issue of the PLN is a one off. It should not be applied to second and subsequent defaults
If the trader defaults again then the penalty is calculated from the day after the due date. The penalty rate should increase by £5 per day. You should calculate the penalty from the day after due date up until either the date the ESL is received or 100 days have elapsed whichever is the sooner.