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VAT inspection and penalties

VAT inspection and penalties

A client has been selected for a VAT inspection.  We have reviewed the returns and paperwork and identified errors from August and September 2008. 

We will advise the inspector when we meet for the VAT inspection that there has been an undeclaration.

Will the penalties be subject to old regime and will the client suffer a maximum misdeclaration penalty of 15%?  The underdeclared VAT is in the region of £4,000.



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16th May 2012 15:29


The new penalty rules will apply, as the errors are since 1 April 2008. The default penalty rate is 30%, although the fact that the disclosure is unprompted will reduce that. Assuming you are providing full and accurate information, you should see a further reduction.

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16th May 2012 16:09

I would agree with Les but I would expecT HMRC to mitigate the penalty to Zero in my experience.

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16th May 2012 20:22

Thanks but....

my understanding was that although the new penalty regime commenced 1 April 2008 it applied to any VAT returns due to be filed after 1 April 2009.

As a result of the errors occurring in VAT quarter ended 30 September 2008, these penalties would fall within the old regime. 

I guess from the answers then that my understanding is incorrect.

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