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.”
Related reading
HMRC ramps up number premises raids
HMRC is continuing to ramp up the number of raids on premises it carries out as part of criminal investigations, searching 761 properties in the last year
Economic activity carried out in the UK must be taxed accordingly
Lord Howard Leigh of Hurley discusses the government’s initiatives to mitigate tax avoidance and evasion
Top 50+50: Demand for tax advisory services remains high, but fee pressure is expected in relation to compliance services
The demand for tax advisory services remains high and this looks to continue; but fee pressure is expected in relation to compliance services as the “Making Tax Digital” initiative is rolled out,
Don’t let caution stall the digital tax revolution
While some resistance to change is to be expected, the degree of controversy surrounding HMRC's Making Tax Digital proposals has surprised the government
