In JCA Seminars Ltd v HMRC [2019] TC 6964, the FTT found that HMRC is not obliged to tell a taxpayer that she is using the wrong flat rate of VAT. Also a payment to HMRC is made when received by them, not when posted to the correct VAT number.

  • A trader ran a VAT-registered business as a sole trader using the VAT flat rate scheme.
  • She selected a 9% scheme percentage, reduced to 8% for the first year.
  • She incorporated the business under a new VAT number and continued using 8% under the flat rate scheme. By then, the relevant rate was 12%, or 11% for the first year.
  • She argued that HMRC should have told her this.

On appeal, the tribunal said HMRC had no such obligation.

Late payment or not?

HMRC assessed the taxpayer for late payment surcharges. The company had paid VAT of £2,000 which was allocated to the old VAT number. HMRC imposed penalties on the company on the grounds that the £2,000 had not been received. The tribunal said this was wrong. The payment is made when received by HMRC, not when it has allocated it to the correct VAT number.

It emerged that the company had been subject to employee fraud and the tribunal accepted that the fraud provided a reasonable excuse of the late payment, and cancelled three default surcharges as a result and recalculated following surcharges accordingly.


Judge Thomas made a review of the VAT payment legisation. 

"A viewer of the HMRC website will find any number of directions relating to electronic communications, but they all relate to direct taxes, not VAT. HMRC act however as if a direction allowing an additional seven days to make a return has been made, and no taxpayer is going to argue against that to their own detriment. 

The secrecy about the directions had lead some HMRC officers compiling statements of case or presenting cases to the Tribunal to suggest that the seven day extension is concessionary, so perhaps there are no directions. It would be a sensible and laudable move for HMRC to publish the directions on their website if there are any."

Useful guides

How to appeal a HMRC decision

VAT Flat Rate Scheme

VAT Penalties: subscriber guide

External link

JCA Seminars Ltd [2019] TC6964