Godavari Consultancy Services Ltd v The Commissioners for HMRC
[2023] UKFTT 120 (TC)
MJL Contracts Limited v The Commissioners for HMRC
17 October 2023
[2023] UKUT 254 (TCC)
Upper Tribunal
MJL owed VAT but paid late. The government charged a late fee. MJL argued the fee was wrongly applied and that the calculation wasn't done properly. The court said the government's rules were correctly followed and the fee was fair.
Key Facts
- •MJL Contracts Limited (MJL) appealed a First-tier Tribunal (FTT) decision upholding a £720.76 default surcharge for late VAT payment.
- •The surcharge related to the 08/20 period; returns were submitted on time, but part of the VAT payment was outstanding.
- •HMRC issued computer-generated surcharge liability notices (SLNs).
- •MJL argued that section 59 VATA only applied if no return was submitted or tax was paid following a section 73(1) assessment.
- •MJL also argued that section 76(1) required HMRC officers to individually assess surcharge amounts.
Legal Principles
A default surcharge is imposed if a VAT return is received but the amount of VAT shown on the return is not received by the due date.
Section 59(1)(b) VATA 1994
A default surcharge is applicable if a taxable person is in default in respect of a prescribed accounting period ending within the surcharge period and has outstanding VAT for that period.
Section 59(4) VATA 1994
Section 73(1) VATA 1994 allows HMRC to assess VAT if no return is filed or a filed return is incomplete or incorrect. It does not dictate when a default surcharge applies.
Section 73(1) VATA 1994
"Assess" in section 76(1) VATA means quantifying a tax liability; it doesn't require individual HMRC officer consideration for each case. HMRC can automate the process.
Donaldson v HMRC [2016] EWCA Civ 761
Section 103 FA 2020 allows HMRC to use computers to perform officer functions, but doesn't directly impact the validity of automated default surcharges.
Section 103 Finance Act 2020
Outcomes
Appeal dismissed.
MJL's arguments that section 59 VATA only applied in specific circumstances and that section 76(1) required individual assessment were rejected. The court upheld the FTT's decision.