Value Added Tax Act 1994, section 70

Mitigation of penalties under sections 60, 63, 64 , 67, 69A and 69C

Part IV Administration, collection and enforcement

(1)Where a person is liable to a penalty under section 60, 63, 64 [F567, 67 [F568 , 69A or 69CF568,F567]] [F569 or under paragraph 10 of Schedule 11AF569] , the Commissioners or, on appeal, a tribunal may reduce the penalty to such amount (including nil) as they think proper.

(2)In the case of a penalty reduced by the Commissioners under subsection (1) above, a tribunal, on an appeal relating to the penalty, may cancel the whole or any part of the reduction made by the Commissioners.

(3)None of the matters specified in subsection (4) below shall be matters which the Commissioners or any tribunal shall be entitled to take into account in exercising their powers under this section.

(4)Those matters are—

(a)the insufficiency of the funds available to any person for paying any VAT due or for paying the amount of the penalty;

(b)the fact that there has, in the case in question or in that case taken with any other cases, been no or no significant loss of VAT;

(c)the fact that the person liable to the penalty or a person acting on his behalf has acted in good faith.

[F570 (5)In the application of subsections (3) and (4) in relation to a penalty under section 69C, subsection (4) has effect with the omission of paragraphs (b) and (c).F570]

Definitions used in section 70 4

the Commissioners

“the Commissioners” means the Commissioners of Customs and Excise;

Defined in s.96(1) · see it in the full Act
tribunal

In this Act “tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal.

Defined in s.82 · see it in the full Act

“tribunal” has the meaning given by section 82;

Defined in s.96(1) · see it in the full Act
subsection (1) above

(a) the reference in subsection (2) to “subsection (1) above” were to “subsection (1) and paragraph 24(1) of Schedule 9ZA”;

Defined in Sch.9ZA para.24(2) · see it in the full Act

(b) the reference in subsection (2A) to “subsection (1) above” were to “subsection (1) or paragraph 24(1) of Schedule 9ZA”.

Defined in Sch.9ZA para.24(2) · see it in the full Act
VAT

“VAT” means value added tax charged in accordance with this Act;

Defined in s.96(1) · see it in the full Act

Cases considering section 70 5

Han v Customs and Excise Comrs (Martins v Customs and Excise Comrs, Morris v Customs and Excise Comrs)

[2001] EWCA Civ 1040 · 3 July 2001Limits

The court considered the statutory mitigation power when assessing whether the penalty was criminal. The possibility of mitigation did not remove the substantial punitive and deterrent character of the penalty. The power to reduce a penalty, including to nil, did not alter the conclusion that the exposure at the time of the charge was substantial and punitive for Article 6 purposes.

Ali (t/a Vakas Balti) v Revenue & Customs

[2006] EWHC 23 (Ch) · 23 January 2006Limits

Confirms that mitigation may reduce the section 60 penalty. The Tribunal was entitled to maintain 10 per cent mitigation because the valid VAT figure was itself based on a dishonest return. (see paras [4], [47])

Total Network SL (a company incorporated in Spain) (Original Respondents and Cross-appellants) v Her Majesty's Revenue and Customs (suing as Commissioners of Customs and Excise) (Original Appellants and Cross-respondents)

[2008] UKHL 19 · 12 March 2008Limits

The Commissioners or tribunal may mitigate specified statutory penalties. The majority treated penalty mitigation as conceptually distinct from assessment of compensatory damages (see paras [139]; [149]). The provision excludes insufficiency of funds, absence of significant VAT loss and good faith from statutory penalty mitigation. Those restrictions did not govern common law compensatory damages (see paras [139]; [149]).

What each judgment says about section 70 is in the case-law panel in the full Act.

Amendments and notes

5 notes from legislation.gov.uk

Amendments

  1. F566Words in s. 70 heading substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), s. 68(3)(a)
  2. F567Words in s. 70(1) substituted (28.7.2000) by 2000 c. 17, s. 137(3)
  3. F568Words in s. 70(1) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), s. 68(3)(b)
  4. F569Words in s. 70(1) inserted (22.7.2004 for specified purposes, 1.8.2004 in so far as not already in force) by Finance Act 2004 (c. 12), s. 19(2), Sch. 2 para. 3; S.I. 2004/1934, art. 2
  5. F570S. 70(5) inserted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), s. 68(3)(c)