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HMRC internal manual

VAT Civil Penalties

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

Please note: the S 67 VATA 1994 penalty has been replaced by the VAT and Excise Wrongdoing penalty introduced by Schedule 41 Finance Act 2008.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.

You should encourage individuals, at the earliest possible opportunity, to explain the circumstances which resulted in them becoming liable to a penalty.

If the explanation amounts to a reasonable excuse the penalty

  • will not be imposed, or
  • will be withdrawn.

If reasonable excuse is not established consideration should be given to mitigating the penalty, see VCP11253.

Section 71(1) of the VAT Act 1994 does not allow lack of funds or reliance upon a third party to be used as a reasonable excuse.

In addition the HMRC have in the past, refused to accept the following as reasonable excuse

  • ignorance of the law
  • oversight or misunderstanding
  • error
  • preoccupation with work
  • inexperience of business affairs
  • no intent to escape payment of tax.