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HMRC issuing incorrect VAT fines

Close to half of VAT-related fines given to businesses are erroneously levied, says accounting giant UHY Hacker Young.

Around 49% of the automatic fines HMRC issued due to late VAT filing last year – numbering more than 17,000 – were overturned upon review.

HMRC established its internal review structure in 2009. It is designed to reassess decisions on VAT where they have been issued to businesses with regards to late payment or filing, or tax disputes.

HMRC’s in-house computer system automatically fines a business if it is late in filing its VAT return, no matter the reasons given. If taxpayers disagree with the decision, they have to appeal and prove that they had warranted circumstances.

UHY Hacker Young Partner Simon Newark said:

“HMRC’s late filing system starts off with the premise that the taxpayer is wrong – you then have to prove your innocence. That’s perceived by taxpayers as being unfair, but unfortunately, that’s what the law says.”

He went on to explain that with HMRC essentially confessing to so many of the fines having been overturned after an appeal, there is clearly something wrong. Newark said that HMRC has recently been tougher on appeals, which has led to department overturning penalties only when taxpayers have an open and shut case.

As long as VAT records are accurate, and filed and paid on time, business owners should be fine. They do need to ensure that they have a decent accountant in the Wirral or wherever their business is based, however, or they may find they end up with a fine to pay.

Posted by Louise
May 29, 2014

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