Godavari Consultancy Services Ltd v The Commissioners for HMRC
[2023] UKFTT 120 (TC)
Biznomy Solutions UK Ltd v The Commissioners for HMRC
17 October 2023
[2023] UKFTT 892 (TC)
First-tier Tribunal
A company didn't pay its VAT on time a few times. They thought they had extra time, but the tax office said they didn't, and the company had to pay a penalty. The judge agreed with the tax office.
Key Facts
- •Appeal against a £458.97 VAT default surcharge for period 10/22.
- •Appellant is Biznomy Solutions UK Ltd, an IT consultancy registered for VAT since 01/12/2019.
- •Late VAT payments were made for periods 4/22, 7/22, and 10/22.
- •Appellant believed they had a 7-day grace period for payments beyond the due date.
- •HMRC issued a Help Letter for the first late payment (7/21) due to turnover below £150,000.
- •Subsequent late payments resulted in a 5% surcharge (the subject of the appeal).
Legal Principles
Requirement for timely VAT returns and payments.
Section 25(1) VATA 1994 and Regulation 40 VAT Regulations 1995
Discretion to extend deadlines for electronic returns and payments.
Regulations 25A(20) and 40 VAT Regulations 1995
Default surcharge provisions for late returns or payments.
Section 59 VATA 1994
Surcharge rates based on the number of defaults within a surcharge period.
Section 59(5) VATA 1994
Reasonable excuse defense against surcharges.
Implicit in the Tribunal's consideration
Outcomes
Appeal dismissed.
Appellant failed to demonstrate a reasonable excuse for the late payments. The Tribunal found the HMRC letters were unambiguous and should have corrected the Appellant's misunderstanding of the payment due date.