United Kingdom - Consequences for incorrect filing of VAT returns
Filing an incorrect VAT return can result in penalties depending on the reason for the mistake. HMRC distinguishes between accidental errors and deliberate misreporting.
1️⃣ Accidental Errors (Mistakes in Data Entry) ❌
If a VAT return contains careless errors, HMRC may impose a penalty of up to 100% of the under-declared tax.
✅ If HMRC is satisfied that proper due diligence was conducted, they may reduce or even waive the penalty.
2️⃣ Deliberate Misreporting (Hiding Transactions) 🚨
If a VAT return was intentionally falsified, penalties can be severe:
🔹 Up to 100% of the understated VAT or overclaimed refund.
🔹 If HMRC issues an assessment and you fail to correct a higher actual tax liability, a penalty of 30% of the understated tax may apply.
🔹 Additionally, late-payment interest can be charged.
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Verified - 12.02.2025 - AK
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