Polyteck Building Services Ltd v The Commissioners for HMRC
[2023] UKFTT 575 (TC)
SB Wakefield Limited v The Commissioners for HMRC
19 June 2023
[2023] UKFTT 548 (TC)
First-tier Tribunal
A company was fined for late tax payments. They claimed they had an agreement to pay later, but couldn't prove it. The judge didn't believe them and said they had to pay the fine.
Key Facts
- •SB Wakefield Ltd appealed a VAT default surcharge of £1,607.14 for VAT period 10/21.
- •The appeal was late but admitted by HMRC.
- •The appellant claimed a time to pay agreement (TTPA) was in place for VAT period 10/20, preventing the 10/21 default from being a second default.
- •The appellant's payment for VAT period 10/20 was late, initially considered a second default, but later accepted as a first default.
- •HMRC records showed a TTPA was agreed on 21.12.20, after the payment deadline for VAT period 10/20.
- •The appellant's contemporaneous letter contradicted their later claim of an earlier TTPA agreement.
- •The appellant admitted late payment for VAT period 10/21 and lacked a reasonable excuse.
Legal Principles
VAT default surcharge is imposed under s.59 VATA.
Value Added Tax Act 1994
A reasonable excuse defense against the surcharge is available under s.59(7)(b) VATA.
Value Added Tax Act 1994
Insufficiency of funds is not a reasonable excuse; reliance on others is also not a reasonable excuse.
Value Added Tax Act 1994, s.71(1)
Reasonable excuse is judged objectively, considering the taxpayer's experience and situation.
Rowland v Revenue & Customs Commissioners [2006] STC (SCD) 536; The Clean Car Company Ltd v The Commissioners of Customs and Excise [1991] VATTR 234; Christin Perrin v HMRC [2018] UKUT 156 (TC)
A TTPA agreed before the payment due date prevents surcharge liability under s.108(2)(b) FA09.
Finance Act 2009
Outcomes
Appeal dismissed.
No TTPA existed before the payment deadline for VAT period 10/20; the appellant's reasonable excuse defence failed due to lack of evidence supporting their claim of an earlier TTPA; late payment for VAT period 10/21 was admitted without reasonable excuse.