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Readers' forum: Deliberate error?

18 August 2015
Issue: 4514 / Categories: Forum & Feedback , Admin , VAT
VAT returns were wrong because of a spreadsheet. Is a penalty due?
My client recently had a VAT inspection and the officer discovered an error for three successive VAT returns. Only one month’s input and output tax figures had been included on each return instead of three months. The resulting net underpayment of tax was £80 000. The officer has decided that the error should be subject to a “deliberate error not concealed” penalty and has charged a 35% penalty of £28 000. If this penalty is enforced it will close down my client’s business which trades in supplying and fitting mezzanine flooring. The reason the officer thinks the error was “deliberate” is because no “business person of reasonable intelligence” would fail to recognise such big underpayments in his VAT liability.
 
Can my client “get out of jail free” on this one?
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