Value Added Tax Act 1994 section 65

Inaccuracies in section 55A statements

Section 65 establishes a three-stage escalating penalty regime for traders who repeatedly submit section 55A statements (statements required under Schedule 11 regulations) containing material inaccuracies to HMRC.

• HMRC must issue a written warning within six months of discovering a material inaccuracy in a section 55A statement, alerting the trader that future inaccuracies may lead to a formal penalty notice.
• If a second materially inaccurate statement is submitted within two years of the warning, HMRC must serve a formal notice within six months of discovering that second inaccuracy, stating that any further inaccuracies will attract a financial penalty.
• If a further materially inaccurate statement is then submitted within two years of the penalty notice (or of the most recent statement that attracted a penalty), a penalty of £100 applies to each such statement.
• An inaccuracy is not treated as material if the trader can demonstrate a reasonable excuse, if the trader voluntarily disclosed full details of the inaccuracy before becoming aware of any HMRC enquiry, or if the trader has already been convicted of an offence in relation to that inaccuracy.