Deliberate behaviour penalties were correct

In 2015 after a VAT visit HMRC issued assessments to the taxpayer. These related to input tax errors on past returns relevant to supplies of exhibition space at various events. HMRC judged that the taxpayer knew that the overclaims were incorrect at the time the returns were submitted and that a penalty for ‘deliberate not concealed behaviour’ was also justified.

The maximum penalty in such cases is 70% of the potential lost revenue (PLR) with a minimum rate of rate of 35% that depends on the level of co-operation given by the taxpayer. HMRC discounted the penalty rates from 70% to 56% and 52.5% to reflect some assistance given by the taxpayer (FA 2007 Sch 24). The First-tier Tribunal considered HMRC had been generous in giving 10% discount for the ‘telling HMRC about it’ category.

The taxpayer’s representative claimed that bank payments and a record of...