Have you failed to submit VAT tax returns and pay VAT on time? If yes, you cannot possibly avoid penalties. But, what you can do is learn about the ways to avoid such penalties and make sure it doesn’t happen next time.

Here is a list of tips that can help you avoid penalties from HMRC.
1. Do not submit incorrect VAT return and allow them to issue estimated assessments. Instead submit correct VAT return by the due date and get the copy of the submitted return for your record keeping.
2. Make sure to pay VAT you owe on time. In case if you are having trouble to pay your bill, inform HM Revenue & Customs (HMRC) immediately before the due date. Doing this might save you from a penalty.
3. Even though you might not have time to keep the records up-to date, it is important you do it. This is because having a correct and up-to date VAT records will help you to complete your tax returns correctly.
4. If you have made a mistake in your tax returns, do not neglect it and correct it straight away. Because leaving the errors might cause a VAT inspection which can eventually lead you to pay penalties.
5. If you are not sure about your VAT affairs, it is best to seek advice from professional VAT advisers. They can provide expert VAT advice on your VAT situations and thus help you to avoid any penalties.
If you think the tax penalty levied by HMRC is wrong, you can always appeal to HMRC by writing them about the explanation. Then, their independent officer will review your case and decide whether the tax penalty is valid or not. Alternatively, you can appeal a tax penalty to a tax tribunal.