Readers’ forum: Will there be penalties due?

I was shocked to read that the principle of commercial restitution no longer applies to VAT errors where no tax has been lost by HMRC ie interest is now charged on all disclosed errors even if output tax not charged by a supplier would have been claimed as input tax by the buyer.

We act for many clients who buy and sell businesses and – when we act for buyers – we always accept the clause in the sales contract that says we will pay any VAT charged by HMRC to the supplier if it deems the transfer of a going concern (TOGC) provisions do not apply. This is because my clients can claim input tax so it is not a problem. However we also accept the other standard wording in the contract that the client will also pay interest and penalties assessed to the seller by...