HMRC internal manual

VAT Civil Penalties

VCP11181 - Reconsiderations and appeals: Action by Appeals Section

A penalty assessment can be appealed to the VAT and Duties Tribunal on grounds of liability, calculation of the amount and reasonable excuse (VAT Act 1994 sections 83 (n) and 83 (q)). The amount cannot be mitigated either by HMRC or the VAT and Duties Tribunal. You can find further information on appeals in V1-29 Reconsideration and Appeals.

You should ensure that the penalty period and amount of the penalty are correct in law before proceeding to tribunal. Errors may be questioned by the tribunal and may effect the outcome of the appeal.

To avoid enforcement action on the penalty before the appeal is heard, you should input Form VAT 672 to ‘ring fence’ the amount in dispute. This will suspend debt management action and prevent any repayment returns or other credits being offset against the penalty (see V1-29 Reconsiderations and Appeals). If an offset against a repayment return has already occurred prior to input of the Form VAT 672 take action in accordance with V1-29 Reconsiderations and Appeals.

Review of cases

You should consider if reasonable excuse exists immediately. All cases are to be reviewed by the review team, even where the case has already been reported to Tax Administration, Litigation and Advice (TALA) for policy guidance, see VCP10140.

If further information comes to light which might affect the advice given please consult Tax Administration, Litigation and Advice (TALA) again before completing your review.

All cases should be reviewed by the Appeals Team.