26/01/10: HMRC to introduce a VAT and Excise Wrongdoing Penalty
HMRC have announced that from 1st April 2010, they will apply new wrongdoing penalties alongside existing penalties and sanctions to seek to prevent abuse in the VAT and excise tax systems. The penalties will be imposed where a person:
- Issues an invoice that includes VAT which the person is not entitled to charge,
- Handles goods on which excise duty has not been paid or deferred (ie. acquires, carries, removes, deposits, keeps or sells the relevant goods),
- Uses or supplies a product in such a way that a higher rate of excise duty is thereby avoided.
A wrongdoing penalty will not be charged by HMRC where a reasonable excuse - being “an unforeseeable and exceptional event beyond your control” – for the relevant activity can be demonstrated. However, HMRC will not consider deliberate action to amount to a reasonable excuse.
The wrongdoing penalty will be calculated as a percentage of the lost revenue, ranging from a minimum (0%) through to a maximum (100%) depending on whether there is a reasonable excuse or the wrongdoing was non-deliberate, deliberate but not concealed or deliberate and concealed; and the extent to which the wrongdoing has been disclosed to HMRC.
It should be noted that where HMRC can identify that a company officer (a director or company secretary) caused a deliberate wrongdoing, such person will be personally liable for the payment of the penalty if there is evidence that they gained personally, or the company is insolvent or there are grounds to suspect that the company will become insolvent.
The usual rights to request a review of the decision to issue a penalty notice and to appeal the matter to the independent Tax Tribunal are available to the taxpayer.
Please contact us if you consider that we can be of assistance to you in any issue arising with HMRC.
