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Illegality of automatic penalities in spain in the event of new VAT returns modifying previous ones
A ruling by the Audiencia Nacional of 12.11.2011 annulled a surcharge levied on a company for presenting VAT returns in replacement of ones sent previously. The reason behind the sending of the new returns was the adaptation thereof to the new criteria applied by the tax authorities during an inspection in relation to certain invoices. Once the tax inspection was completed, and in relation to previous years not subject to inspection, it became apparent that the input VAT had not been deducted when appropriate. The company voluntarily decided to change some returns so that they showed VAT payable. The administration nonetheless decided to apply a surcharge as a penalty for late payment.
In this ruling, the Court concluded that this penalty was unlawful insofar as the inspection carried out by the administration and which had resulted in changes in the deductibility of input VAT, had carried no penalty. Should such a penalty have been deemed to be acceptable, this could be construed as punishing a company that voluntarily regularises the situation applicable by the administration to future tax periods.
Unfortunately, this ruling does not help us in all other cases where an automatic late payment surcharge is established, this being of 5% up to three months delay, of 10% up to 6 months, of 15% up to 12 months and of 20% as of 12 months delay.