October 7th, 2015

A more aggressive stance from HMRC regarding penalties for errors on VAT returns?

Of late, HMRC appear to be behaving more agressively when issuing penalties for errors made on VAT returns.  We need to be aware of this for the following reasons:

  1. The penalty is higher (20-70%) of VAT undeclared
  2. Deliberate penalties can not be suspended
  3. Potential for HMRC to go back more than four years when issuing an additional assessment
  4. Threat of being named and shamed as a deliberate defaulter

There have been more incidences of penalties for ‘deliberate errors’ in situations where taxpayers have submitted VAT returns after making an assumption or not checking a particular treatment.  Often the intention would be to correct via an adjustment on the next VAT if within the voluntary disclosure limits.

HMRC are arguing that a deliberate but nor concealed error occurs when a document is returned that is know to contain an inaccuracy.

Best practice advice would therefore to be vigilant when preparing and submitting VAT returns, remembering also that preparing in a timely manner as soon as you can after the quarter end provides more time to take advice and deal with any issues prior to the filing date and will hopefully lead to error-free returns.

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Alison obtained a First class degree in Accountancy and Management at UCLAN University. She then went on to qualify as a certified accountant in 2006 and became a founder member in 2011.

Alison trained at a practice in Liverpool and, within her 10 years there, she developed as an accounts manager and obtained a varied portfolio of clients which has provided her with a range of experience in accounts, audit, VAT and taxation.
Alison specialises in giving sound jargon-free advice to a range of small and medium sized businesses.

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