HMRC’s New VAT Reign: “Deliberate” Errors Now the Main Event
What’s the “Deliberate” Buzz About?
- Missing or overstated VAT – when an accountant decides to cheat the system by leaving out the correct VAT on sales or by cherry‑picking expenses, claiming more than they owe.
- Heavy fines – HQ can slap you with 20‑100% of the missing VAT on top of the charge.
The Numbers That’ll Make Your Tax Advisor’s Eyes Wide
- Serious penalties shot up by 38% in the last 12 months.
- From 2,011 to 2,781 “deliberate” fines – a 770‑fines swing.
- HMRC lost £153 million across 46,376 penalties, a full £3,300 per fine on average.
“It’s All About Cash” – Says VAT Partner Jas Dhillon
Jas Dhillon, VAT Partner at Lubbock Fine, flips the coin: “HMRC is tightening its grip, multiplying the most severe penalties, and it feels like a deliberate push to line the taxman’s wallets.”
‘Innocent’ vs ‘Deliberate’: Why the Line Matters
Tagging a slip as innocent means you could dodge a fine entirely or just pay a fraction. The tax man’s goal? Keep the “deliberate” bandwagon rolling so they keep their pockets pocked.
Bottom line: Keep your books clean, or you’ll end up on the tax man’s “deliberate” list and pay more than you thought.
How businesses can challenge HMRC’s investigations
When HMRC Gets Serious: VAT Penalties on the Rise
Got a “deliberate and concealed” flag on your VAT filings? That’s the red flag that tells HMRC you’re not just slipping up—you’re actively trying to dodge taxes. The penalties for these nastier cases range from a hefty 30 % up to a full 100 % of the tax owed. And in the past year, the number of these penalties jumped 4 %, climbing from 1,924 to 1,994.
What’s Driving the Numbers?
Graham Caddock, Tax Investigations Director at Lubbock Fine, points out that VAT’s maze of rules often trips legitimate businesses awake. Common, innocent mix‑ups—like using the wrong invoice name, misdating a note, or sending an invoice that shouldn’t carry VAT—aren’t typically done on purpose. Still, without solid guidance, the penalties can (and usually do) blow up.
Sharp Rise = Harder Stance
“HMRC’s tighter grip on VAT compliance means less room for error,” says Graham. “If you’re uncertain, get professional advice—it’s a lifesaver before you get slammed with a penalty you didn’t ‘deserve’.”
Too often, companies find themselves hand‑picking fines they can later discharge. “Pressure to accept penalties can feel like a full‑time job itself, just to keep things quiet,” he adds.
Your Playbook to Dodge the Drats
- Disclose early—Submit a voluntary disclosure to HMRC and stay hands‑on through any enquiry.
- Show cooperation—Transparent collaboration can shrink the penalty to the lower end of the range.
- Seek specialist counsel—A seasoned advisor can reframe an error from “deliberate” to “careless,” often nudging HMRC into waiving the fine entirely.
Case in Point
Jas Dhillon of Lubbock Fine recounts: “We’ve convinced HMRC that a wrong invoice date was a one‑off mistake, not a calculated dodge. By proving reasonable care, we often win a clean bill of health—or at least a trimmed penalty.”
Bottom Line
VAT rules can feel like a minefield, but with the right help and honest disclosure you can stay on the safe side. Don’t let a sharp ticket fly through a lack of advice—because the cost of a penalty can sometimes outstrip that of forward planning.
Stay informed and keep those invoices wired right. For the latest on tax updates subscribe now to get real‑time alerts straight to your device.
