1. Wrong VAT return filing because of an error with the data:
- In case of careless error HMRC can impose a penalty of 100% under-declared tax. In case they are satisfied that proper due diligence was done, they can impose a smaller penalty or omit the penalty altogether.
2. Wrong VAT return filing done with the purpose of hiding transactions or similar:
- If a wrong VAT return has been filed and it was done by purpose of hiding or deceiving something, the penalty charge can be up to 100% of the understated / over claimed refund.
- If HMRC sends an assessment and you do not inform the authorities that the actual tax is higher than the assessment, the penalty can be 30% of the understated tax.
- Additionally, interest for late-payment of VAT can be charged.