HMRC have issued Revenue and Customs Brief 15/11. The Brief highlights a change in HMRC’s view on the charging of penalties as a result of timing inaccuracies. The change in view related to the operation of the 'delayed tax' provision of the new penalties for inaccuracies, introduced in paragraph 8 of Schedule 24 to the Finance Act 2007. HMRC’s approach will now be that where it intervened to correct the inaccuracy before the second return was received, thus preventing the inaccuracy from being reversed and where HMRC are satisfied that, but for their intervention, the inaccuracy would have been automatically corrected in a subsequent return, customers will receive the reduced penalty based on the rules for delayed tax.
HMRC have said: 'If you have been charged a penalty for an inaccuracy on a return and you believe that, had HMRC not intervened before a subsequent return could be submitted, the inaccuracy would have been automatically reversed in a subsequent period, you should contact HMRC to request that the penalty is reviewed. You should refer to this Revenue and Customs Brief when making your request. Remember this only applies to timing inaccuracies, those that are automatically reversed in a subsequent period after they are made without you having to do anything more. It does not apply to the VAT Error Correction procedure nor to compensating but unrelated inaccuracies.'