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Penalty Suspension

Any prospect of suspension of a failure to notify penalty?

We took on a client who had failed to notify his requirement to register for VAT. This was a blip due to a one-off large job. The VAT position for the period he should have been registered has been agreed and the penalty is now being "discussed".

I'm happy with the level of penalty agreed but does anybody have experience of getting a penalty for a failure to notify suspended? My initial attempts have been batted back by HMRC.

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23rd Apr 2018 12:58

So you say you have agreed the penalty? What is the penalty and how did you manage to get it agreed? Please elaborate on what ''initial attempts'' you have made.

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23rd Apr 2018 14:07

On what basis are they batting the suspension back?

My only experience of HMRC refusing suspensions is:

1. When the penalty is deliberate
2. When there aren't clearly identifiable suspension conditions that can be applied and followed by the taxpayer in order to maintain the suspension.

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23rd Apr 2018 14:14

I do not think you can suspend a failure to notify penalty. This is because you cannot become liable to notify again, so the circumstances will not recur.
FA 2008, Sch 41 has no provision for suspension.

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By wamstax
to leshoward
25th Apr 2018 17:20

Hi Les
Technically you could become liable again e.g. you were able to deregister and then become liable again in future

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to leshoward
25th Apr 2018 17:32

I agree with you, Les.

However, a penalty is a penalty. Distinguishing between penalties is rather like a soccer referee claiming that a penalty for handball is different for a penalty for a foul.

In my opinion, you should be able to suspend a careless grade penalty for late notification.

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23rd Apr 2018 14:33

Suspending penalties is for inaccuracies and not for failure to notify. That's what HMRC pointed out to me recently when i tried for it.

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23rd Apr 2018 15:00

Thanks for the above.
HMRC response is that they cannot suspend penalties for failure to notify. They accept the error was only careless but the officer has refused to consider suspending the penalty stating that ..."HMRC cannot allow suspension of the failure to notify penalty as there are no legal grounds for doing so".
Whilst this may be correct I do wonder if there aren't conditions that could be set which might allow suspension. Whilst I've seen articles and reports of tribunal cases supporting taxpayers who have pursued this after initial refusal of suspension I haven't yet found anything specific regarding failure to notify penalties.
I'd be happy to be proved wrong though!
The penalty involved is about £1k so worth arguing further if there's any chance of success.

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By jcace
23rd Apr 2018 15:52

bosclibby wrote:

We took on a client who had failed to notify his requirement to register for VAT. This was a blip due to a one-off large job.

I presume that exception from registration is not relevant.
"You can apply for a registration ‘exception’ if your taxable turnover goes over the threshold temporarily.

Write to HMRC with evidence showing why you believe your VAT taxable turnover won’t go over the de-registration threshold of £83,000 in the next 12 months."

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By cfield
25th Apr 2018 10:04

If HMRC accept that it was a careless error, the penalty can be reduced to zero if they allow 100% for telling, helping and getting copies of all relevant documents. If it was an unprompted disclosure and your client cooperated as much as possible, this should be achievable. Ask the inspector why full marks aren't being given for this and what more your client could have done to get a reduction to nil.

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25th Apr 2018 13:04

I had a similar case just over a year ago with a large one off invoice that required my client to register and not a temporary blip. There was a long delay in registering but I put forward some good mitigation and HMRC agreed not to impose a penalty. As others have commented there are no grounds for suspending the penalty so perhaps you need to look again at the mitigation and make sure that you have given HMRC a complete explanation of the circumstances. If your client has fully cooperated with HMRC you might win.

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