Value Added Tax Act 1994

16 (1) In relation to any prescribed accounting period beginning before 1st December 1993 section 64 shall have effect subject to the following modifications—

(a) in subsection (1)(b) for the words from “whichever” to “period” there shall be substituted “whichever is the greater of £100 and 1 per cent. of the true amount of VAT for that period”;

(b) for subsections (2) and (3) there shall be substituted—

“(2) Subsection (3) below applies in any case where—

(a) there is a material inaccuracy in respect of any two prescribed accounting periods, and

(b) the last day of the later one of those periods falls on or before the second anniversary of the last day of the earlier one, and

(c) after 29th July 1988 the Commissioners serve notice on the person concerned (“a penalty liability notice”) specifying as a penalty period for the purposes of this section a period beginning on the date of the notice and ending on the second anniversary of that date.

(3) If there is a material inaccuracy in respect of a prescribed accounting period ending within the penalty period specified in a penalty liability notice served on the person concerned that person shall be liable to a penalty equal to 15 per cent. of the VAT for that period which would have been lost if the inaccuracy had not been discovered.”;

(c) in subsection (4) for “(5)” there shall be substituted “(7)”; and

(d) in subsection (6) the words from “except” to the end shall be omitted.

(2) A penalty liability notice shall not be served under section 64 by reference to any material inaccuracy in respect of a prescribed accounting period beginning before 1st December 1993, and the penalty period specified in any penalty liability notice served before that day shall be deemed to end with the day before that day.