NEARLY HALF of VAT fines against businesses are levied incorrectly, according to Top 50 firm UHY Hacker Young.
Approximately 49% of the 17,200 automatic penalties HMRC issued for the late filing of VAT in 2013 were overturned when taxpayers requested a review.
Set up in 2009, HMRC's internal review system re-examines VAT decisions imposed on businesses in relation to tax disputes and the late filing or payment of tax.
HMRC's computer based system is designed to automatically impose a fine if a VAT return is filed after the deadline regardless of circumstances. Taxpayers are then forced to make an appeal themselves to fight the fine and prove a good reason for the late filing.
Simon Newark, Partner at UHY Hacker Young, comments: "HMRC's late filing system starts off with the premise that the taxpayer is wrong - you then have to prove your innocence. That's perceived by taxpayers as being unfair, but unfortunately, that's what the law says.
"With HMRC ultimately admitting that half the fines levied are overturned on appeal, something is going wrong. HMRC has been taking a much harder line on VAT appeals in general in recent times, so they will only overturn penalties where the taxpayer has an overwhelmingly clear-cut case."
You may also like
If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.
In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.