Discretion, reasonable excuse and mitigation: Discretion
Discretion is provided for in VAT Act 1994 Section 76.
Providing there are sound reasons for doing so, HMRC can exercise their discretion not to impose a penalty. However this is likely to be exceptional and case papers should record the reasons for the decision and endorsement by the line manager.
In exercising discretion you should
- Maintain equality of treatment when applying a penalty.
- Consider all the circumstances of each individual case.
- Always remember that the objective of civil penalties is to encourage trader compliance.