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.
Thanks
Replies (3)
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Penalties
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.
I would agree with Les but I would expecT HMRC to mitigate the penalty to Zero in my experience.