Nearly Half of VAT Fines Incorrect
UHY Hacker Young has found that almost half of VAT fines levied by HMRC against businesses are incorrect. The top 50 firm found that of the 17,200 automatic penalties for late filing that HMRC issued in 2013, roughly 49% were ultimately overturned.
If a business files its VAT return after the deadline, a fine is automatically imposed. Since this system is completely automated, no extenuating circumstances are taken into account. However, HMRC has an internal review system, which was first set up in 2009 and allows businesses to request the fine be reviewed. It is at this stage that circumstances are able to be considered, and barely less than half of all fines are overturned.
Apart from the large number of incorrect fines, the controversy surrounding this system is down to the fact that no matter how good the taxpayers reason for filing the return late, they are forced to fight an appeal in order to avoid a fine. AS UHY Hacker Young partner Simon Newark puts it “HMRC’s late filing system starts off with the premise that the taxpayer is wrong.”