DNA Defence Ltd v Revenue & Customs [2011] UKFTT 594 (TC) (12 September 2011)

DNA Defence Ltd v Revenue & Customs [2011] UKFTT 594 (TC) (12 September 2011)

The appellant failed to demonstrate a reasonable excuse for late VAT payment because no valid time to pay arrangement existed for the relevant periods, late payment was a predictable feature of the business, and the appellant did not take reasonable steps (such as using cash accounting or proper credit control) to mitigate cash flow issues. The circumstances did not meet the Steptoe exception, and ignorance of the law or available schemes was not a valid excuse.

Citation
[2011] UKFTT 594
Parties
Appellant: DNA Defence Ltd; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
12 September 2011
Procedural Posture
VAT Default Surcharge Appeal / First Tier Tribunal (tax), Substantive Decision
Outcome
Appeal dismissed
Legal Topics
VAT Penalties, Reasonable Excuse, Cash Accounting, Time to Pay Arrangement
Tax Law VAT Penalties Reasonable Excuse Cash Accounting Time to Pay Arrangement

Case Brief

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Parties

DNA Defence Ltd

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

VAT Default Surcharge Appeal / First Tier Tribunal (tax), Substantive Decision

Legal Issues

  1. 1 Whether the appellant had a reasonable excuse for late payment of VAT under s 59 Value Added Tax Act 1994
  2. 2 Whether a time to pay arrangement existed for the relevant VAT periods
  3. 3 Whether cash flow problems due to late payment by clients constitute a reasonable excuse

Ratio Decidendi

The appellant failed to demonstrate a reasonable excuse for late VAT payment because no valid time to pay arrangement existed for the relevant periods, late payment was a predictable feature of the business, and the appellant did not take reasonable steps (such as using cash accounting or proper credit control) to mitigate cash flow issues. The circumstances did not meet the Steptoe exception, and ignorance of the law or available schemes was not a valid excuse.

Court Disposition

Appeal dismissed

Orders

  • VAT default surcharge of £1,408.64 upheld against the appellant