VCP10769 | Misdeclaration penalty: Discretion, reasonable excuse, and mitigation: Computer error

Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after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

• What checks took place between transcribing figures from the computer outputs to the VAT return?

• Did the error occur in a newly installed system, or an established system?

• If it was a new system, had the installation been well researched and supervised, or was it badly thought out and done too quickly?

• Were manual records being kept to test the accuracy of the new system?

• Was this a one off error or were there recurring problems?

• If it is an established system, had it been error free in the past?

• Was the problem a hardware/software error or simply an operator error?

• How well were the operators trained and how closely were they supervised?

• How secure was the system from outside influences such as power cuts, and were there any procedures in place to test the system for corruptions after such an event?

  • Was there a back-up system?

  • Had the software been amended by the taxable person?