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November 2012

VAT penalties - Directors made liable

Between 2008 and 2012 the VAT penalty rules were reconsidered by HMRC. But in order to ensure everyone pays the right amount, the old rules may still be applied under the following criteria:

>Where errors were made in a VAT return for a period starting on or after April 1 2008

>Where the return was due to be submitted on or after April 1 2009

>Where there was a failure to notify of a liability to be registered after April 1 2010

The maximum penalty that can be issued is 100% of the unpaid VAT as a result of the error. This however can be decreased by 20% should the company own up without being prompted by HMRC, and co-operating to put right the mistake and pay the VAT owed.

Directors and company secretaries need to be aware that where HMRC can prove the error was a deliberate and dishonest attempt to avoid VAT, they will be held personally liable for the penalty.

If you are unsure about your VAT payments and would like to talk to someone about this in more detail, please contact our business services manager Colette White on 02476 518 555.