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Penalties for unauthorised VAT invoices - the basics

A penalty can be levied by HMRC where an unauthorised person issues an invoice which purports to show an amount of VAT. An example of an unauthorised person is an unregistered trader operating below the VAT registration threshold.

The penalty is calculated by reference to the VAT or the amount representing VAT shown on the invoice and different penalty rates apply depending on whether the action was non-deliberate, deliberate or deliberate and concealed.

Within certain parameters it is possible to reduce the amount of a penalty if the disclosure is unprompted and/or the quality of the disclosure is high. It is therefore important to address any issues that are discovered promptly and carefully.

What is an unauthorised VAT invoice?

An unauthorised VAT invoice is:

1. •

   an invoice representing VAT or including an amount attributable to VAT

2. •

   issued by an unauthorised person