A penalty used in the collection of value added tax. It applies when there has been a material inaccuracy in a VAT return, being the lower of £500,000 and 10% of the total true amount of VAT due for the quarter. The trader must also have received a surcharge liability notice resulting from a previous error within the 15 months prior to the current VAT period. In these circumstances a penalty for repeated errors of 15% of the VAT lost will be charged.
Subjects: Financial Institutions and Services — Accounting.