Civil fraud is punishable by a penalty under VATA 1994, former s. 60(1). The penalty is sometimes known as the ‘civil evasion penalty’ (CEP) and should be assessed and notified to a trader under VATA 1994, s. 76. The assessed amount is recoverable from the trader as if it were VAT due from him (VATA 1994, s. 76(9)).

HMRC can assess the penalty if:

(1)a person did any act (for example, a misdeclaration on a VAT return) or omitted to take any action (for example, in Stevenson and Telford Building & Design Ltd v C & E Commrs [1996] BVC 428 failing to VAT register (VATA 1994, s. 60(1)(a));

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