Section 60 & 61 VAT ACT 1994

Section 60 & 61 VAT ACT 1994

Civil Evasion VAT Penalty Payments

This piece of VAT legislation makes company directors and managers personally responsible for VAT that their company should have paid. The penalties can be as much as 100% of the VAT that should have been paid.

Under Section 61 (6) of this act the definition means any manager, secretary or other similar officers of the company corporate or any person purporting to act in any such capacity as a director, or where the affairs of a body corporate are managed by its members, this section shall apply in relation to the conduct of a member in connection with his functions of management as if he were a director of the body corporate.

The power to apportion a penalty to a named officer od the company was introduced to prevent company personnel from acting dishonestly and then being shielded behind corporate liability. It was also intended to increase the likelihood of recovering a penalty in situations where it is known before assessment that the corporate body cannot afford to pay.

New penalties legislation was introduced by Schedule 24, Finance Act 2007 and Schedule 41, Finance Act 2008. As a consequence , one of these new penalties as opposed to a VAT civil evasion penalty might apply. Fraudulent non-payment of VAT can also be considered to be a criminal offence.

Limited companies which have been dissolved and struck off the register of companies at Companies House are no longer in existence and can have no liability to a section 60 penalty.

The same principles apply, for the most part, to LLPs. However, the insolvency regime applied to LLPs has been modified and is complicated. - Call us for advice. A company that is in liquidation it is not excluded automatically from liability to a VAT civil penalty.

We are frequently contacted by directors of companies that have ceased trading who are surprised at receiving personal penalties under VATA 1994 Section 61 for significant sums of money, anything up to £200,000 being common.

Do not attend interviews

HMRC will undoubtedly invite you in for an interview. During the course of this interview, you may innocently say the wrong thing and implicate yourself in a VAT civil evasion case. Our advice is never attend an interview unless legally required to, and never attend an interview without talking to our tax investigation advisor beforehand.

Beware Creditor's Meetings

HMRC will send will be present at the creditors meeting and are allowed to ask you questions. Invariably, your responses will be used to support an investigation for the recovery VAT under Section 61 of VATA 1994. Under no circumstances should you attend a creditors without representation from our tax specialist.

How We Can Help

  • All contact with HMRC is through us
  • We manage HMRC technical challenges with ease
  • We can liaise with your solicitor and accountants
  • We will keep updated at every turn
  • We will fight your corner and make sure you pay only what is due
  • We will take away the stress and worry, allowing you to sleep at night

Without exception, when the taxman comes knocking, he wants to recover tax and VAT. In serious cases, we have saved companies literally tens of thousands of pounds - a fraction of the fees that we charge.

Contact us TODAY for some friendly, helpful advice.

Get in Touch

Don't bury your head in the sand and hope nothing will happen. Contact Ken Robinson today for professional representation. We can work with your solicitor or accountant and will limit the damage any HMRC TAX & VAT investigation can do, taking away all the worry and stress, and giving you total peace of mind. Typically, we achieve reductions in tax and penalty liabilities of 75% which more than compensates for our fees.

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"Like many small accountancy practices we do not have the in-house specialist tax expertise required in order to support our clients during an HMRC investigation. So it is reassuring to know that we can offer our clients the specialist tax advice they need, as and when required. This happened recently with a client who needed international offshore tax advice and planning for non-resident status in the UK. Thankfully Ken was able to provide this advice promptly and professionally."
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