VAT and Excise penalties
HMRC have published new Guidance on VAT and Excise penalties setting out how the new system will operate.
From 1 April 2010 the new penalty regime will apply where taxpayers:
– Issue an unauthorised invoice showing or including VAT;
– Misuse a product so that a higher rate of excise duty is payable, or supply a product knowing that it will be used in such a way;
– Handles goods subject to unpaid excise duty.
Penalties will not normally be issued in limited scenarios where HMRC are satisfied that the taxpayer had a ‘reasonable excuse’.
Penalties for wrongdoings will range from 10% to 100% of the VAT or excise duty unaccounted for or of the VAT charged by non registered traders. In such cases the VAT will also be fully recovered.
|Reason for wrongdoing||Disclosure||Minimum penalty||Maximum penalty|
|Reasonable excuse||No penalty||No penalty|
|Careless||Unprompted||10 per cent||30 per cent|
|Careless||Prompted||20 per cent||30 per cent|
|Deliberate||Unprompted||20 per cent||70 per cent|
|Deliberate||Prompted||35 per cent||70 per cent|
|Deliberate & concealed||Unprompted||30 per cent||100 per cent|
|Deliberate & concealed||Prompted||50 per cent||100 per cent|