VCP10768 | Misdeclaration penalty: Discretion, reasonable excuse, and mitigation: Complex liability

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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

The following questions should be addressed when considering reasonable excuse

• Is the size of the trader relevant?

• Was the subject covered satisfactorily in a Public Notice or VAT leaflet?

• Was the subject of the assessment part of the trader’s main business activity?

• What steps had been taken to confirm the liability? Had this been checked with the National Advice Service or accountants etc?

• Had the error continued for some time and not been corrected on previous control visits?

• Had any liability change been widely publicised e.g. through VAT notes, or the media?

• Should the trader have been familiar with the transaction?

• How easy was it for the officer to determine the correct liability?