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Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after 01/04/2009. Misdeclaration penalty will still apply where the due date is before 01/04/2009.

Please see the Compliance Handbook CH80000 Penalties for Inaccuracies for further details.

The following questions should be addressed when considering reasonable excuse

• Has the trader claimed reliance on a third party for all or part of their argument?
• Has the trader fulfilled their responsibility to account for tax at the right time?
• Can the provisions of section 71 be overridden by other reasonable excuse arguments such as illness of the “other personâ€� which affects their ability to perform the task accurately?

The definition of an “other person� is any person outside the direct employment of the registered trader. The registered trader will be responsible for the acts of their employees.

The words “perform any task� includes the giving of advice by a professional adviser as well as the delegation of book-keeping/accounting duties.

Reliance on a third party is not excluded from the grounds for mitigation. You will need to consider whether such reliance was reasonable before allowing mitigation.