misdeclaration penalty

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A penalty of 15% of the value added tax lost in understating the VAT liability or overstating the VAT refund due on the VAT return, when the amounts involved are material. The penalty will apply if the inaccuracy equals the lesser of £1 million and 30% of the total amount of tax due for the period of the VAT return. The penalty can be avoided if the taxable person can show that there was reasonable excuse, that there had been a voluntary disclosure, or that the taxable person had reason to believe that their VAT affairs were under investigation by HM Revenue and Customs.

Subjects: Financial Institutions and Services — Accounting.

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