Biznomy Solutions UK Ltd v The Commissioners for HMRC
[2023] UKFTT 892 (TC)
GB-Gadgets Ltd v The Commissioners for HMRC
21 August 2023
[2023] UKFTT 726 (TC)
First-tier Tribunal
A company didn't pay VAT on time and got fined. They tried to argue they shouldn't have been paying VAT in the first place, but they didn't have the paperwork to prove it. The judge said they had to pay the fine.
Key Facts
- •GB-Gadgets Ltd appealed a £46,726.79 failure to notify penalty for unpaid VAT (1 September 2013 – 31 March 2018).
- •A separate inaccuracy penalty of £8,588.94 was suspended as GB-Gadgets ceased trading.
- •GB-Gadgets' director, Mr. Hussain, acquired the company in December 2017.
- •HMRC's compliance check began in January 2020, leading to the penalty assessment.
- •The appeal initially focused on special circumstances, but Mr. Hussain later argued turnover didn't exceed the VAT threshold until April 2018.
- •GB-Gadgets lacked records before September 2016 to support this new claim.
- •HMRC's assessment was based on sales records from eBay and potentially other sources.
Legal Principles
Principles for allowing amendment of grounds of appeal (lateness, reasonable prospect of success, consequences).
C4C Investments Ltd [2022] UKFTT 367 (TC); Essex County Council v UBB Waste (Essex) Limited [2019] EWHC 819 (TCC); Quah Su-Ling v Goldman Sachs International [2015] EWHC 759; CIP Properties (AIPT) Limited v Galliford Try Infrastructure Limited [2015] EWHC 1345 (TCC)
Penalties for failure to notify under Schedule 41, Finance Act 2008 (culpability, penalty amounts, potential lost revenue, disclosure, special circumstances, reasonable excuse).
Finance Act 2008, Schedule 41
Burden of proof on HMRC to establish penalty liability; assessment of special circumstances and reasonable excuse.
Finance Act 2008, Schedule 41
Objective test for reasonable excuse (establishing facts, proving facts, objective reasonableness, remedying the failure).
Perrin (2018) UKUT 156 (TCC)
Wide discretion for HMRC and the Tribunal to reduce penalties due to special circumstances, subject to specific exclusions.
Barry Edwards v HMRC [2019] UKUT 0131 (TCC); Advanced Scaffolding (Bristol) Limited v HMRC [2018] UK FTT 0744 (TC)
Outcomes
Appeal dismissed.
The Tribunal refused permission to add a new ground of appeal lacking reasonable prospects of success. HMRC's decision on special circumstances was not flawed, and no reasonable excuse for the failure to notify was found.