Value Added Tax Act 1994 section 70

Mitigation of penalties under sections 60, 63, 64, 67, 69A and 69C

Section 70 deals with the power of HMRC and tribunals to reduce certain VAT penalties, while specifying factors that must not be taken into account when deciding whether to grant a reduction.

• HMRC or a tribunal on appeal may reduce a penalty imposed under sections 60, 63, 64, 67, 69A, 69C or paragraph 10 of Schedule 11A to any amount they consider appropriate, including reducing it to nil.
• Where HMRC has already reduced a penalty, a tribunal hearing an appeal may reverse all or part of that reduction, effectively reinstating some or all of the original penalty amount.
• When deciding whether to reduce a penalty, neither HMRC nor a tribunal may take into account: the person's inability to pay the VAT due or the penalty; the fact that there has been no or no significant loss of VAT; or the fact that the person or their representative acted in good faith.
• For penalties under section 69C (transactions connected with VAT fraud), the restriction is narrower — only the insufficiency of funds argument is excluded; the provisions about no significant VAT loss and good faith do not apply as excluded matters.

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