Modifications etc. (not altering text)
C1Pt. I Chapter II (ss. 11-13) modified by Finance Act 1988 (c. 39, SIF 40:2), s. 21(a)
(1)If any person fails to comply with a requirement imposed under—
(a)paragraph 7 [F1or 7A] of Schedule 1 to the principal Act [F2paragraph 5 of Schedule 1A to that Act or paragraph 5 of Schedule 1B to that Act][F3(notification of end of liability or entitlement to be registered etc.)], or
[F4(aa)any regulations made under section 32A of the principal Act requiring a tax representative, for the purposes of registration, to notify the Commissioners that his appointment has taken effect or has ceased to have effect, or]
(b)paragraph 7(1) or paragraph 8 of Schedule 7 to that Act (records and information, etc.), or
(c)any regulations or rules made under that Act, other than rules made under paragraph 9 of Schedule 8 thereto (procedural rules for tribunals), [F5or]
[F5(d)any order made by the Treasury under that Act; or
(e)any regulations made under the European Communities Act 1972 and relating to value added tax]
he shall be liable, subject to subsections (9) and (10) and section 21(6) below, [F6to a penalty equal to the prescribed rate multiplied by the number of days on which the failure continues (up to a maximum of 100) or, if it is greater, to a penalty of £50.]
(2)If any person fails to comply with a requirement to preserve records imposed under paragraph 7(2) of Schedule 7 to the principal Act, he shall be liable, subject to the following provisions of this section, to a penalty of £500.
(3)Subject to subsection (4) below, in relation to a failure to comply with any such requirement as is referred to in subsection (1) above, the prescribed rate shall be determined by reference to the number of occasions in the period of two years preceding the beginning of the failure in question on which the person concerned has previously failed to comply with that requirement and, subject to the following provisions of this section, the prescribed rate shall be,—
(a)if there has been no such previous occasion in that period, [F7£5];
(b)if there has been only one such occasion in that period, [F7£10]; and
(c)in any other case, [F7£15].
(4)For the purposes of subsection (3) above—
(a)a failure to comply with any such requirement as is referred to in subsection (1) above shall be disregarded if, as a result of the failure, the person concerned became liable for a surcharge under section 19 below;
(b)a previous failure to comply with any such requirement shall be disregarded if it occurred before the passing of this Act [F8or, in the case of a requirement falling within paragraph (d) or paragraph (e) of subsection (1) above, before the passing of the Finance Act 1986];
(c)a continuing failure to comply with any such requirement shall be regarded as one occasion of failure occurring on the date on which the failure began;
(d)if the same omission gives rise to a failure to comply with more than one such requirement, it shall nevertheless be regarded as the occasion of only one failure; and
(e)in relation to a failure to comply with a requirement imposed by regulations as to the furnishing of a return or as to the payment of tax, a previous failure to comply with such a requirement as to either of those matters shall be regarded as a previous failure to comply with the requirement in question.
(5)Where the failure referred to in subsection (1) above consists—
(a)in not paying the tax due in respect of any period within the time required by regulations under section 14(1) of the principal Act, or
(b)in not furnishing a return in respect of any period within the time required by regulations under paragraph 2(1) of Schedule 7 to that Act,
the failure shall be disregarded for the purposes of that subsection and subsections (3) and (4) above unless it begins on or after the day appointed under section 12(8) above but, subject to that, in relation to such a failure the prescribed rate shall be whichever is the greater of that which is appropriate under paragraphs (a) to (c) of subsection (3) above and an amount equal to onesixth, onethird or onehalf of 1 per cent. of the tax due in respect of that period, the appropriate fraction being determined according to whether paragraph (a), paragraph (b) or paragraph (c) of subsection (3) above is applicable.
(6)For the purposes of subsection (5) above, the tax due,—
(a)if the person concerned has furnished a return, shall be taken to be the tax shown in the return as that for which he is accountable in respect of the period in question, and
(b)in any other case, shall be taken to be such tax as has been assessed for that period and notified to him under paragraph 4(1) of Schedule 7 to the principal Act.
(7)If it appears to the Treasury that there has been a change in the value of money since the passing of this Act or, as the case may be, the last occasion when the power conferred by this subsection was exercised, they may by order made by statutory instrument substitute for the sums for the time being specified in subsection (2) and paragraphs (a) to (c) of subsection (3) above such other sums as appear to them to be justified by the change; but an order under this subsection shall not apply to a failure which began before the date on which the order comes into force.
(8)A statutory instrument made under subsection (7) above shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.
(9)A failure by any person to comply with any such requirement as is referred to in subsection (1) or subsection (2) above shall not give rise to liability to a penalty under this section if the person concerned satisfies the Commissioners or, on appeal, a value added tax tribunal that there is a reasonable excuse for the failure; and a failure in respect of which the Commissioners or tribunal have been so satisfied shall be disregarded for the puposes of subsection (3) above.
(10)Where, by reason of conduct falling within subsection (1) or subsection (2) above,—
(a)a person is convicted of an offence (whether under the principal Act or otherwise),or
(b)a person is asssessed to a penalty under section 13 or section 14 above, or
(c)a person is assessed to a surcharge under section 19 below,
that conduct shall not also give rise to liability to a penalty under this section.
Textual Amendments
F1Words inserted by Finance Act 1988 (c. 39, SIF 40:2), s. 19(1)(a)
F2Words in s. 17(1)(a) inserted (1.12.1992 for certain purposes and 1.1.1993 insofar as not already in force) by Finance (No. 2) Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. II para. 81(a); S.I. 1992/2979, art. 4, Sch. Pt. II and S.I. 1992/3261, art. 3, Sch.
F3Words substituted by Finance Act 1988 (c. 39, SIF 40:2), s. 19(1)(a)
F4S. 17(1)(aa) inserted (1.12.1992 for certain purposes and 1.1.1993 insofar as not already in force) by Finance Act (No. 2) 1992 (c. 48), s. 14(2), Sch. 3 Pt. II para. 81(b); S.I. 1992/2979, art.4, Sch. Pt. II and S.I. 1992/3261, art. 3, Sch.
F5Word “or” and s. 17(1)(d)(e) inserted by Finance Act 1986 (c. 41, SIF 40:2), s. 15(1)
F6Words substituted by Finance Act 1988 (c. 39, SIF 40:2), s. 19(1)(b)(5)
F7 “£5”, “£10” and “£15” substituted respectively for “£10”, “£20” and “£30” by Finance Act 1988 (c. 39, SIF 40:2), s. 19(2)(4)(5)
F8Words added by Finance Act 1986 (c. 41, SIF 40:2), s. 15(2)