Breach of VAT Regulatory Provisions: Action to take with Regulatory Penalties: Issuing penalty warning letters
In what circumstances should a warning letter be issued?
The warning letter may require the trader to correct breaches of the regulatory requirements already committed in addition to a requirement to adhere to the relevant regulatory provision in the notice period.
When a breach of a regulatory requirement has been identified a further warning letter should be issued where appropriate, when the breach has been corrected.
If a penalty assessment letter is issued a warning can be included in that letter. The further warning resets the clock for the purposes of VAT Act 1994 Section 76(2) and any further breach within 2 years of the date of the further warning letter will make the trader/non registered person liable to a regulatory penalty.
VAT Act 1994 Section 76(2) requires us to issue a warning letter to a trader or nonregistered person before a penalty can be assessed for the following breaches of theregulatory requirements
- Section 69 (1) (c) – failure to keep records required by regulations, the failure to notify changes in registration particulars, and the failure to provide information or produce documents.
- Section 69 (1) (d) – failure to comply with any requirement set out in regulations made under the Act (except for procedural rules for VAT Tribunals).
- Section 69 (1) (e) – failure to comply with any requirement set out in a Treasury Order made under the VAT Act.
- Section 69 (1) (f) – failure to comply with any requirement set out in regulations made under the European Communities Act 1972 relating to VAT.
A regulatory penalty can be assessed for these breaches within a period of 2 years after the issue of the penalty warning letter.
For suggested text to include in different types of penalty warning or assessment letters for breach of regulatory provisions, see VCP11156.
Note: For guidance on when a warning letter is not necessary, see VCP11157.