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Belated Notification Penalty has been replaced by the Failure to Notify penalty introduced by Schedule 41 of the Finance Act 2008. The Failure to Notify penalty applies to obligations to notify HMRC of a liability to be registered for VAT on or after 01/04/2010. The Belated Notification Penalty under Section 67 VATA 1994 continues to apply to obligations to notify a liability to be registered for VAT before 01/04/2010.

Please see the Compliance Handbook CH70000听for more details about the new failure to notify penalty.

The penalty assessment is normally based on the

• trader鈥檚 calculation of 鈥榬elevant VAT鈥�
• the trader鈥檚 turnover, or
• HMRC Officer鈥檚 assessment.

The trader is asked to provide a calculation of 鈥楻elevant VAT鈥� in the belated notification penalty letter.

If the trader does not respond within 30 days of the penalty letter, unless an HMRC officer has assessed the 鈥榬elevant VAT鈥� an estimate should be made on the other evidence available (usually turnover) and a penalty assessment made.

If the trader provides a calculation of 鈥榬elevant VAT鈥� which is acceptable or an HMRC officer has assessed 鈥榬elevant VAT 鈥�, you should calculate the penalty at the appropriate percentage, see VCP10455, of the net tax liability (relevant VAT) OR 拢50 if greater.

If the trader fails to respond to the penalty letter, in the absence of more accurate information, you should calculate the net tax liability by applying the following formula

• Number of days in the period of failure divided by 365, then
• Multiply that figure by the amount entered on box 23 of VAT 1 (consider as tax inclusive) and multiply that by the VAT fraction see note below, which then
• Equals the net tax 鈥榶鈥櫶�

Note: The VAT fraction has been 1/6 since 04 January 2011.

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The penalty will be the appropriate percentage, see VCP10455, of 鈥榶鈥� or 拢50, whichever is the greater.