In Intrinsys Ltd v HMRC [2015] TC04611 the first tier tribunal (FTT) has allowed an appeal against a default surcharge, holding that the appellant had a reasonable excuse for missing the bank cut-off time for same day transactions.


  • Intrinsys is VAT registered. It has one employee who handles VAT matters, and he is the only one with the expertise to do so.  
  • He became ill during the week the return in question was due, meaning that the return was prepared later than was usual.
  • As a direct consequence, the amount to be paid was not known until 6 March (a Friday) which was the last working day a payment could be made on time.
  • The appellant’s bank had a 3.30pm cut off time for same day transactions involving a different bank.  
  • The Finance Director had a genuine belief that the cut off was 4.30pm, which was the cut off time for same day transactions involving the same bank.
  • The high value nature of the transaction meant it required electronic countersigning, and this was eventually done at 4.28pm as the person required was away in a meeting.
  • As this was after the 3.30pm deadline the payment was not received by HMRC until the next working day, Monday 9th March.
  • HMRC issued a surcharge penalty of £8,043 and the company appealed on the grounds that the circumstances meant that it had a reasonable excuse, and the penalty was disproportionate.


  • The FTT held that the illness of the member of staff responsible for preparing the VAT return directly contributed to the late payment as there was no one else who could have prepared it.
  • The tribunal also found that there was nothing on the banking platform that differentiated between the 3.30pm and 4.30pm deadlines, and so it was not unreasonable for the Finance Director to have believed he could make a same day transaction by 4.30pm as he had done so before.  
  • The company therefore had a reasonable excuse and the appeal was accepted.
  • The FTT also commented that it did not find the penalty to be disproportionate, though this was irrelevant as the reasonable excuse matter had already been decided.


It is important to note that had the Finance Director merely been incorrect in his belief that the cut off time for all same day payments was 4.30pm this would not have constitued a reasonable excuse.  

In fact, he was able to clearly demonstrate why he thought this, and the tribunal was therefore satisfied that it was not unreasonable for him to hold this belief.

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Intrinsys Ltd v HMRC [2015] UKFTT TC04611