VCP10714 | Misdeclaration penalty: Why a penalty arises: When is a penalty triggered

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after 01/04/2009. Misdeclaration penalty will still apply where the due date is before 01/04/2009.

Please see the Compliance Handbook CH80000 Penalties for Inaccuracies for further details.

Traders become liable to a misdeclaration penalty when they

• send a return or a series of returns which understates their liability to tax

• over claim their entitlement to a repayment

• accept a centrally issued assessment that is to low and fail to notify HMRC within 30 days of its issue of their true liability for the period.

Objective tests are used to see if the period is liable to a penalty.

See VCP10801 for further guidance on

• objective tests

• penalty rates , and

• the penalty base at which a penalty is triggered.