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