AS MANY as half of all penalties imposed in relation to VAT are overturned on appeal, according to figures obtained by UHY Hacker Young.
An article in the Financial Times said that the firm obtained figures from the taxman which revealed that of 28,912 VAT reviews between April 2009 and September 2010, more than half, 16,270, were overturned.
The FT quotes UHY VATpartner Simon Newark saying that HMRC officers were behaving like “traffic wardens” in the way they issued fines and that the figures were “staggering”.
A statement from HMRC rejected claims that officials were under pressure to issue fines and pointed out that many fines were issued automatically when returns were made late then overturned when valid excuses were made.
A HMRC spokesman said: “”Only a small proportion of the millions of decisions we make each year are queried. Our decisions are based on the information we have at the time.
“Removing a penalty after someone gives a reasonable excuse for their lateness does not mean the penalty was wrongly levied, but that we accept the customer’s excuse for the failure.”
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