Vat Penalties

VAT PENALTIES

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NO VAT PENALTIES FOR MISSING THE FIRST QUARTERLY MTD DEADLINE

If you pay your VAT quarterly by direct debit the sign-up window has closed. This is for the 7 August (30 June quarter) submission. Do not worry as HMRC have announced that there are no VAT penalties this time. You may file the old way and come back when the direct debit has been collected to sign up for next time.

Although HMRC won’t penalise you, they’ll send a letter stating you missed the deadline and asking you to take action.

 

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COMPANY OFFICERS JOINTLY AND SEVERALLY LIABLE FOR VAT PENALTIES

The decision in a recent tax tribunal case reminds us that directors and other company officers may be personally liable for VAT penalties of their company. The recent case

involved a penalty for late registration for VAT where the threshold had been exceeded.

Three conditions must be satisfied before the liability for a penalty payable by the company can be imposed on an individual:

  • A penalty must be payable by the company for a deliberate failure.

  • The individual on whom HMRC seek to impose liability must be an “officer” of the company

  • The deliberate failure must be attributable to that officer.

 

An officer of a company means..

1. for a body corporate, other than a limited liability partnership,

* a director (including a shadow director within the meaning of section 251 Companies Act 2006)
* a manager, or
* a company secretary

in any other case …

* a director
* a manager
* a company secretary, and
* any other person managing or purporting to manage any of the company’s affairs.


Where we treat a Limited Liability Partnership (LLP) as a body corporate ‘officer’ means a ‘member’ of that LLP. 

https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch98650

HMRC’s internal manual, The Compliance Handbook gives clear descriptions of when the charging of a penalty to a company offer will be considered and the circumstances that must apply.

GOV.UK: Penalties for VAT and excise wrongdoing: other penalty issues: company and company officer penalties: company officer liable to a penalty