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HMRC internal manual

VAT Civil Penalties

HM Revenue & Customs
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Unauthorised issue penalty: Discretion, reasonable excuse and mitigation: Discretion

Please note: the S 67 VATA 1994 penalty has been replaced by the VAT and Excise Wrongdoing penalty introduced by Schedule 41 Finance Act 2008. The VAT and Excise Wrongdoing penalty applies where a person makes an unauthorised issue of an invoice on or after 01/04/2010. If an unauthorised invoice has been issued before 01/04/2010 the S 67 penalty will continue to apply.

Please see the Compliance Handbook CH90000 Penalties for more information about the VAT and Excise Wrongdoing penalty.

HMRC have the discretion whether or not to impose penalties.

Provided that there are sound reasons for not imposing a penalty, to which an unauthorised person has become liable, HMRC can exercise their discretion and choose not to impose a penalty.

In some cases you may feel that although no reasonable excuse, see VCP11252 or mitigating circumstances, see VCP11253, exist, nevertheless a penalty should not be issued.

Such situations may be rare and should always be discussed with your line manager. Reasons for the decision taken must be fully recorded in the case papers and available for subsequent review.

An example of case where you may wish to exercise discretion is

  • Where the amount shown as tax on invoices issued by an unauthorised person is negligible (less than £200). The issue of a warning letter may be considered appropriate, see VCP11256.