Prompted or Unprompted disclosures - a timely warning
Submit Articles Back to Articles
23rd May 2013
The recent VAT Tribunal case of United European
Gastroenterology Federation (“UEGF”) has outlined some of the questions
regarding whether a disclosure is ‘prompted’ or ‘unprompted’ if it is
prior to an upcoming VAT inspection.
The UEGF had, across three VAT returns, made errors on both
the input and output calculations that totalled £699,822. They have, it
must be noted, conceded that
the errors in question were ‘careless’. HMRC assessed for a penalty of
nearly £105,000, based on their belief
that the disclosure was “prompted” by the notification of a VAT visit.
Based on the quality of the disclosure, HMRC
had mitigated the value down as much as they could.
HMRC had arranged a VAT Control Visit to discuss the
accuracy of one of the returns, and this was arranged before UEGF’s
had discovered that there was a problem with their returns. As such,
UEGF argued that they would have
made the disclosure irrespective of the control visit, and wished to
disclosure marked as unprompted.
The Tribunal looked over the facts before them, and
considered them in light of the legislation regarding the penalty
regime. Whilst they found that UEGF had indeed made
the move to make the disclosure, the
notification of an impending visit was enough for the taxpayer to
HMRC would discover the error.
This serves as a warning that the time to make a disclosure
to HMRC as soon as an error is discovered. If you hold off it may be
that your client receives a routine visit
notification and the most that you can do is to mitigate any penalty
down to a
minimum of 15% of the value of the error that has been made.
This demonstrates the importance of regularly reviewing your
client’s VAT affairs and also submitting full disclosure reports to
soon as errors are discovered. The VAT
People has successfully removed or substantially removed since the
of the current VAT penalty regime.
About the Author
VAT People are leading VAT and Customs Duty
consultants based in the
North West of England. We work with a wide range of businesses
throughout the UK as well as assisting our accountancy colleagues to
unravel the thorny VAT issues for their clients. We are one of the UK's
largest and most comprehensive sources of VAT and Customs advice, our
consultancy team having over 140
years of experience in VAT and Customs
gained in either HMRC or a Big 4 accountancy practice environment.
Call us on our VAT helpline 0800 077 4604 to discuss. All initial discussions are free with no-obligation.
Follow us @Scopulus_News
Article Published/Sorted/Amended on Scopulus 2013-06-11 11:09:29 in Tax Articles