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.”
Freelancers and micro-businesses still need more information about the government’s plans to make tax digital
New dividend tax is an attack on small business owners and is acting against the best interests of the UK economy, warns Top 50 accountants, Bishop Fleming
The Treasury is consulting on how businesses remunerate their staff to assess whether companies are artificially using benefits in kind to avoid tax
HMRC is consulting on proposals to clarify the tax treatments of general and limited partnerships