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HMRC internal manual

VAT Civil Penalties

Mitigation Framework: Why and when we should mitigate a penalty: How the infringement occurred

How the infringement occurred Maximum of 50%
Compassionate grounds (where the circumstances are insufficient to warrant a reasonable excuse) such as  
  • Unforeseen serious illness of the person responsible for completing the VAT returns (including third party such as professional advisor).
  • Death of a close relative of the person responsible for completing the VAT returns. from 20% - 50%
      Other unforeseen and relevant events which nevertheless you do not consider provide a reasonable excuse on their own but are supported by evidence such as
  • Computer or software errors.
  • Flood, fire or other damage to premises.
  • Theft or break in.
  • Pressure of work i.e. exceptional and significant increase in workloads not in keeping with normal work fluctuations.
  • Staff problems i.e. where the person responsible for completing the VAT return leaves at short notice.
clerical errors particularly in complex circumstances where management controls are in place but have failed to spot the error. from 10% - 50%  
  Complexity of liability in relation to the size of the business and frequency of transaction. from 10% - 50%