Value Added Tax Act 1994 section 63

Penalty for misdeclaration or neglect resulting in VAT loss for one accounting period equalling or exceeding certain amounts

Section 63 established a penalty regime for VAT returns that contained material inaccuracies or were prepared negligently, where the resulting VAT loss in a single accounting period met or exceeded prescribed threshold amounts.

• A penalty applied where a VAT return for a single accounting period understated the VAT liability or overstated a VAT credit, and the error was due to a misdeclaration or negligent preparation, provided the resulting loss equalled or exceeded the prescribed threshold.
• The threshold was set at whichever was the greater of £1,000,000 or 30% of the relevant amount (broadly, the true amount of VAT due or claimable for the period), meaning the penalty targeted only the most significant errors in a given period.
• The penalty amount was equal to 15% of the VAT lost to the Exchequer as a result of the inaccuracy or neglect in that accounting period.
• This section was repealed by the Finance Act 2007 and replaced by the unified penalty framework in Schedule 24 to that Act, which introduced a single set of rules for errors in tax returns across multiple taxes including VAT.

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