In Silvergate Support Services Limited v HMRC [2017] TC05854 the First-Tier Tribunal (FTT) did not accept that payment of VAT to HMRC's bank account constituted a notification of an underassessment.

  • He was unable to file VAT returns due to problems obtaining activation codes and ‘getting online’
  • He attempted to contact HMRC on various occasions for assistance, including by phone, by email and by checking online guidance, though no response was received.
  • HMRC issued a VAT assessment and pointed out that any underassessment must be advised within 30 days to avoid penalties.
  • No address was shown on the VAT assessment, but the taxpayer responded to a letter from HMRC debt recovery explaining the difficulties with filing the return and confirmed that VAT of a higher amount had been calculated as due and had been paid.
  • This process was repeated for a second assessment received.
  • After these two cases, and having receiving no reply to his attempts to contact HMRC, the taxpayer took the view that the sensible approach would be to ensure correct payments were made so that there was no potential lost revenue despite not filing the VAT returns.
  • Over £28,000 in VAT was paid to HMRC without accompanying VAT returns.
  • HMRC carried out an inspection, identifying only two errors and following which, the taxpayer was able to file the VAT returns online with help from telephone support.
  • HMRC issued prompted disclosure penalties for the underassessments covering 7 return periods.

The FTT agreed with HMRC that penalties were due:

  • An assessment was made by HMRC which understated the VAT liability
  • The taxpayer, apart from the first two assessments, failed to take reasonable steps to notify HMRC of the underassessment within 30 days

The FTT accepted that, as the taxpayer had written to HMRC after the first two assessments, he had taken reasonable steps to notify HMRC of the underassessment. The appeals against these penalties were upheld.

Although the taxpayer had paid VAT to HMRC, he had not corresponded with HMRC in relation to HMRC’s other underassessments: making a payment in excess of the assessments received did not constitute notification to HMRC of an underassessment. The appeals against these penalties were dismissed.


Another victim of a complex tax system. The penalties were for £4,469 in total, and so barely worth the cost of a hearing for HMRC. Had the taxpayer received proper professional advice he might have realised that he needed to notify HMRC. As with all these cases there is possibly more of a back story to the case than we can see from the decision. We hope that once Making Tax Digital gets underway a taxpayer who is having problems filing returns will receive more support from HMRC.


Penalties (VAT)

Filing paper VAT returns

Filing VAT by telephone

How to enrol for VAT online services

How to register for VAT online (taxpayers)

Case: Silvergate Support Services Limited v HMRC [2017] TC054540388

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