VCP10743 | Misdeclaration penalty: Misdeclaration penalty for repeated errors: Liable periods for the penalty

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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

A penalty liability period (PLP) is any period in which there is an error which is material for a repeated misdeclaration penalty MP(R), see VCP10742, purposes. This means an error material for the purpose of

• serving the Penalty Liability Notice PLN

• establishing the warning period, and

• establishing any breaches within the warning period which may lead to a penalty for repeated errors.

A PLP arises when the following events occur

• errors are made on a VAT return, and

• the errors are discovered and the GAT, see VCP10801, adjusted by the processing of a VAT 641, 642, 643 or 644

Note: Although under-declaration errors voluntarily disclosed are not liable to MP, the adjustment made to GAT may result in other MP liable errors meeting the objective tests

• If the MP liable amount equals or exceeds £500,000 then the period is deemed to be a PLP. If the MP liable amount is less than £500,000 the following calculation is carried out:

  • MP Liable amount multiplied by 100, then

  • Divide that figure by the GAT, which then

  • Equals the percentage

If the percentage equals or exceeds 10% of GAT the period is deemed to be a PLP.