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HMRC internal manual

VAT Civil Penalties

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HM Revenue & Customs
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Incorrect certificates to zero-rating and lower rate supplies: Calculation and notification of a penalty: When should a penalty be imposed

If a tax assessment is issued to the supplier a penalty should not be issued. The purpose of the penalty is to recover the amount equal to the tax and if the tax is recovered via a tax assessment the issue of a penalty is not appropriate, see VCP11342 for further information in relation to tax assessments.

A penalty can be imposed if the certificate is incorrect. We do not have to show intention or dishonesty, only that the certificate is incorrect.

If you feel that there is evidence to suggest that the person was dishonest you should consult the Civil Evasion Penalty guidance at VCP10300.

If you have identified a case which you feel qualifies for a section 62 penalty, see VCP11312 you should consider the facts carefully, consulting as necessary.

Before issuing the penalty the possibility of a reasonable excuse should be considered, see VCP11332.

If the person who gives the incorrect certificate is registered for VAT and could have claimed back all of the VAT which was not charged due to the incorrect certificate as input tax, no incorrect certificates penalty should be charged.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)