CH192370 - Penalty reform - penalties for failing to file VAT returns by the due date for periods from 1 January 2023: penalties for failing to make returns: awarding a penalty point after an appeal

NB: “These rules currently only apply to VAT for VAT periods starting on or after 1 January 2023. These rules will come into force for other tax regimes at a future date. You must check the date from which these rules apply for the tax or duty you are dealing with”

If the Tribunal

• cancels a decision that a financial penalty is payable, and
• cancels a decision that the taxable person was liable to a penalty point which led to a financial penalty being charged

then, special rules apply if:

• the taxable person had failed to file a further VAT return (in the same group of returns) on time after the cancelled point had originally been awarded by HMRC, but before the Tribunal decision to cancel the penalty point was made, and
• at the time this additional failure occurred, the taxable person already had the maximum number of penalty points for that group of returns (and so would not have been awarded a penalty point in the usual way)

In this situation, HMRC may award a penalty point in respect of the additional failure before the end of the period of 12 months beginning with the day after the Tribunal decision; meaning that the normal time limits under paragraph 6(3), see CH192180, do not apply.

The Appeals, Reviews and Tribunals Guidance contains detailed guidance about the review and appeal process - ARTG3000 for indirect taxes.

FA2021 SCH 24 para 24 (4)