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Please note: VAT Misdeclaration Penalty has been replaced by the Schedule 24 inaccuracy penalty for all accounting periods where the return period commences on or after 01/04/2008 and the due date is on or after 01/04/2009. Misdeclaration penalty will still apply where the due date is before 01/04/2009.

Please see the Compliance Handbook CH80000 Penalties for Inaccuracies for further details.

A misdeclaration penalty (MP) inhibit signal should be set when:

• an acceptable voluntary disclosure has been made
• a reasonable excuse exists for the error
• one of the relaxations exists
• the assessment forms part of a fraud investigation where a civil evasion penalty may be imposed
• the trader is insolvent.

You should consider the MP inhibit on every assessment raised. »Ê¹ÚÌåÓýapp fact that MP may not be triggered on that particular assessment is irrelevant.

»Ê¹ÚÌåÓýapp MP inhibit is set by inserting a â€�1â€� in the MP inhibit box on the VAT 641. If the inhibit needs to be set after the assessment has been issued then a VAT 643 should be completed. Inhibits are not required on over-declaration lines of an assessment as these are automatically MP liable credits.

MP inhibits should be countersigned by one grade above the person raising or amending the assessment.