CH403352 - Charging penalties: Calculating penalties: Potential Lost Revenue (PLR): obtaining the PLR in VAT Mainframe cases: completing forms VAT641/642 for suspensions including for delayed tax and recovery assessment
Before completing the VAT641/642, you must calculate the penalty percentage rate (PPR) in NPPS and take this figure forward to the VAT641/642 form.
Columns for Behaviour Type and PPR are included in these forms and must be completed for periods covered by the inaccuracy penalties.
A more detailed guide to filling out VAT641/642 forms is in the VAT inputs documents guidance (Word 295kb).
The revised VAT641/642 requires the completion of the following for each inaccuracy or group of inaccuracies:
Behaviour type - Enter one of the following for each row
- A: Mistake despite taking reasonable care
- B: Failure to take reasonable care (careless)
- C: DU Deliberate but not concealed
- D: Deliberate and concealed
- U: Under-assessment - Although not a behaviour this is used where an additional assessment is raised because a prime/central assessment is too low and an under-assessment penalty is considered appropriate, see CH81090.
- Blank: Leave blank if the period is not subject to Schedule 24 penalties.
PPR - Enter the PPR for each inaccuracy.
Suspensions - Only appropriate for behaviour code B. To show whether or not the penalty for the individual inaccuracy is to be suspended enter
- 0 - No suspension, or
- 1 - Suspension.
Inhibit functions - You will only inhibit a new penalty for inaccuracy in exceptional circumstances. For example, if the case is being considered under the evasion referral procedures but a tax assessment needs to be raised so that it is not out of time.
Delayed tax - If you consider the inaccuracy has arisen as a result of delayed tax, see CH82390, and you raise a VAT641 use Reason Code 16. Use this code for the period in which the initial inaccuracy occurred and the subsequent period in which this delayed tax is accounted for. It is also possible that delayed tax might be applied on the basis that the initial inaccuracy would be reversed in a future period.
Recovery assessments - Where a recovery assessment is issued following the discovery of an erroneous repayment, use assessment Type Code 4.
The VAT641/642 form must be checked and countersigned, according to existing procedures, before being sent to the VALID team. VALID will input the form into VMF.
The VMF will generate a D2211 report. This will provide the PLR to be for input into NPPS.