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.