In McNamara Joinery Ltd v HMRC [2016] TC 05278 problems getting hold of HMRC by phone were found to be a reasonable excuse for late payment of VAT.

  • The taxpayer’s VAT return for the period ended 31 December 2015 was due on 7 February 2016.
  • The return was filed on time but due to cash flow problems the taxpayer could not pay the tax due.
  • On 5 February 2016 their agent tried to contact HMRC but could not get through.
  • They finally got through to HMRC on 12 February and agreed a two week payment extension.
  • The taxpayer paid within the two weeks, but HMRC assessed a surcharge anyway as the extension was not requested before the payment due date.

The First Tier Tribunal (FTT) found that the taxpayer had a reasonable excuse for late payment:

  • Insufficiency of funds was not itself a reasonable excuse.
  • The taxpayer’s agent did however do all they could in the circumstances to try and reach HMRC before the deadline.
  • The repeated failure to contact HMRC was unexpected and unforeseeable and therefore a reasonable excuse.

The FTT rejected HMRC’s argument that the taxpayer and their agent should have been aware that there would be a large volume of calls just before the due date:

  • Rather than expecting delays it is reasonable for a taxpayer to expect HMRC to answer phone calls without delay.
  • If HMRC are aware that there is likely to be a large volume of calls they should have arrangements in place to make sure they are dealt with promptly.

The appeal was therefore allowed and the surcharge overturned.


Case reference: McNamara Joinery Ltd v HMRC [2016] TC 05278

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Reasonable excuse

Penalties (VAT)

Appeal: grounds for appeal