How much is the missing paperwork worth to HMRC?

£10,266. That is what 84 missing pieces of paper cost a mid-sized UK mobility retailer — 240 zero-rated orders over two years, 35% of them with no signed eligibility declaration on file, £420 average net order value. Not a fine for selling the wrong thing. A bill for not being able to prove you sold it to the right person.

VAT Notice 701/7 lets you zero-rate goods supplied to a chronically sick or disabled customer for their domestic or personal use: wheelchairs, stairlifts, incontinence products, adjustable beds, adapted vehicles, the bathroom you rebuilt for someone who cannot use a bath. The notice also puts the burden of proof on you, the supplier. The customer signs an eligibility declaration saying they are disabled and the goods are for their own use, and you keep it in your records. When a VAT officer visits, the declaration is the evidence. Without it, the supply is standard-rated, and the 20% you never charged comes out of your margin.

The gap is almost never fraud. It is a phone order on a busy Friday, a form emailed and never returned, a declaration filed in the customer's folder instead of with the invoice. Every one of those looks like a clean zero-rated sale in your accounts. It only becomes a number when an officer samples orders and works outward from what is missing.

Here is the part most people get wrong when they try to estimate the damage in their head. It is not just the VAT.

The VAT. 84 undocumented orders at £420 net is £35,280 of sales that should have carried 20%: £7,056.

The penalty. An inaccuracy in a return carries a penalty under Schedule 24 of the Finance Act 2007, as a percentage of the tax — careless and unprompted can fall to nothing, careless after HMRC comes knocking runs to 30%, deliberate goes to 70%. At the careless-prompted band, that is another £2,116.80. Note where the percentage lands: on the VAT, not on the sale value. Applying it to the sale is the single most common mistake in a back-of-the-envelope estimate, and it inflates the number fivefold.

The interest. Late-payment interest has been the Bank of England base rate plus 4% since 6 April 2025, and has stood at 7.75% since 9 January 2026. Over 24 months on £7,056, that is £1,093.68 — and it keeps running while you decide what to do.

The window. HMRC can assess four years back under s.77 of the VAT Act 1994. That cuts both ways: a shop with six years of thin paperwork is not assessed on all six, but a shop with two years of it is fully exposed. Scaling the order count to the window is the difference between a realistic figure and a panic.

Total: £10,266.48. Divide by 84 and every missing declaration is worth £122.22 — which is the number that changes behaviour on the shop floor: a price on the thirty seconds it takes to get a form signed.

Run your own figures: the free browser tool below takes the order count, the missing-declaration share, your average net order, the penalty band, the interest rate and the years of history, and returns all of it — no key, no limit, no locked result. A chatbot will not do this for you; it does not know your order count, it does not apply the four-year cap, and it will happily put the penalty on the sale value. A generic VAT calculator adds 20% to one line.

Two things to do this week. Pull twenty zero-rated orders at random and check whether the signed declaration is actually in the file — that sample gives you the percentage to type in. Then run the number before the next return: an unprompted disclosure sits in a lower penalty band than one made after HMRC finds the gap.