New VAT and excise wrongdoing penalties
New VAT and excise wrongdoing penalties will apply from 1 April 2010. The penalties will apply in situations where taxpayers:
- Issue an invoice which includes ‘VAT’ that is not chargeable;
- Handle goods on which excise duty has not been paid or deferred – for example bringing alcohol into the UK from abroad free of excise duty for personal consumption but ultimately selling the alcohol in the UK;
- Use a product in a way that means more excise duty should have been paid – for example the sale of red diesel to non-qualifying persons;
- Supply a product at a lower rate of excise duty knowing that it will be used in a way that means a higher rate of excise duty should be paid.
A wrongdoing penalty can be for up to 100% of lost tax revenue. The penalty can be reduced to nil in cases where the taxpayer has a reasonable excuse for his actions.
The percentage penalty charged, as for other taxes, will depend on whether any disclosure was prompted or unprompted and also on whether the wrongdoing was deliberate and concealed, deliberate but not concealed or not deliberate.