HMRC internal manual

VAT Civil Penalties

VCP11132 - Definition of Regulatory Penalties: Conditions and rates for general Regulatory Penalties

Failure to comply with the regulatory requirements set out in paragraphs 69 (1) (a) to(g), of the VAT Act 1994, makes a person liable to a general regulatory penalty.

There is no liability to a regulatory penalty if the trader is assessed for a default surcharge, see VCP10500, for the same failure. This includes default surcharge due for late payments on account.

The penalty rate to be applied depends on which regulatory requirement is breached.

General regulatory penalties

The penalty rates for a failure referred to in section 69(1)(a) to (g) are contained insection 69 (3)

  • If there has been no previous failure to comply with the requirement within 2 years prior to the present failure - £5.
  • If there had been only one such occasion in that period - £10.
  • In any other case - £15.

There is a minimum penalty of £50 (section 69 (1)).

Note: An initial penalty for a breach of a regulatory requirement should always be raised at the lowest rate of £5 irrespective of the number of previous breaches identifiable within the 2 years preceding the failure, unless a warning letter has been sent for an earlier breach which was complied with, where the £10 rate applies.

Subsequent breaches should be penalised at the higher rate of £10 for a second failure or £15 for a third or subsequent failure.

The penalty rate is applied to the number of days a failure continues up to a maximum of 100 days.