In St James Marketing Limited v HMRC [2020] TC07975, First Tier Tribunal (FTT) dismissed the appeal of late payment/filing of VAT as reasonable excuse offered.

St James Marketing submits VAT returns on a quarterly basis and has done so since first registering for VAT.

  • It first entered the default surcharge regime during the period 12/18 and a Surcharge Liability Notice (SLN) was issued by HMRC.
  • Payment for the period 03/19 was received 12 days late, on 19 May 2019. HMRC issued an SLN Extension and St James Marketing was liable to a further surcharge at 2%.
  • Payment for the period 06/19 was received 23 days late, on 30 August 2019. HMRC issued another SLN Extension and the Appellant was liable to a surcharge of 5% on this occasion.
  • Payment for the period 09/19 was payment on 10 November 2019, which was three days after the due date. An SLN Extension was issued once more and the surcharge applicable was 10%.

On 21 December 2019, St James Marketing requested a review of the decision to issue a surcharge. HMRC upheld the surcharge by a response issued on 23 January 2020.

  • St James Marketing appealed to the FTT on the basis that it had a Reasonable Excuse for its failure. The SLN notices had not been received apart from the notice relating to 09/19.
  • The Late payment for 09/19 was late due to computer issues when it was not possible to access online banking which was out of the company’s control.
  • The company provided documentary proof of the online banking problems at Lloyds Bank.
  • Previous payments were late due to illness.
  • The company is a small business and paying a surcharge will cause financial hardship.

First Tier Tribunal (FTT) found that:

  • There was no evidence of any difficulties with the postal service at around the time of the notices being delivered. The notices were therefore deemed to have been delivered on time.
  • There was no evidence that St James Marketing attempted to contact HMRC to discuss any problems in relation to making payment of VAT, prior to the default surcharge assessment being issued.
  • The FTT concluded that St James Marketing does not have a reasonable excuse and the appeal was dismissed.

Useful guides on this topic

Correcting VAT errors
What are the time limits? Can you do it through the VAT return? Do you have to notify HMRC?

Penalties: VAT
When do penalties apply for VAT? What penalties are charged and how can they be mitigated?  

Grounds for appeal: Reasonable excuse
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?

External Link

St James Marketing Limited v HMRC [2020] TC07975


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