EC Sales Lists - penalties

For those that do not have to complete them, EC Sales Lists are a piece of EC Beaurocracy. It is administered by HM Revenue and Customs and connected to VAT administration. Broadly it is a quarterly report listing any sales a company has with customers in the rest of the EC.

So there is no tax collection aspect to this. It is something UK business is required to do to help the beaurocrats prepare their statistics.

We prepare these reports for some clients and sometimes they can be fairly labour intensive. The process to set up and file the reports on line is also a bit cumbersome. The reports hold no value for our clients and we or our clients gain no reward or credit for preparing them.

So here's the rub. HMRC are inclined to issue penalties for late submission of these reports, sometimes without prior warning, many months after the reports are overdue. By this time daily penalties have clocked up to a staggering £500! The penalty bears no relation or any tax undeclared (there is none) or even the value of sales understated. So a one off £10 sale to a customer in Europe could result in a £500 fine if a report is not submitted. Is this fair and proportionate? I think not, but reading some Tribunal reviews, in many instances these penalties appear to be upheld.

I think a much gentler compliance regime would be appropriate for these reports. Maybe more helpful reminders and support to file the reports and less of the 'blunt stick' of a disproportionate penalty sent without prior warning. This smacks of a revenue raising scheme by HMRC and I wonder how may other businesses have been caught out by this?