London Needs Cooling Ltd v Revenue & Customs (VAT - PENALTIES : Reasonable excuse) [2018] UKFTT 525 (TC) (29 August 2018)

London Needs Cooling Ltd v Revenue & Customs (VAT - PENALTIES : Reasonable excuse) [2018] UKFTT 525 (TC) (29 August 2018)

The reasonable excuse defence under Section 59 VATA 1994 applies only to the existence of a default, not to the calculation of the surcharge amount. Since the Appellant admitted no reasonable excuse for the late payment of £9,222.64, a default occurred for the full VAT liability, and the surcharge must be calculated on the entire outstanding amount as of the due date.

Citation
[2018] UKFTT 525
Parties
Appellant: London Needs Cooling Limited; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
29 August 2018
Procedural Posture
VAT Default Surcharge Appeal / First Tier Tribunal (tax Chamber) Decision
Outcome
Appeal dismissed
Legal Topics
VAT Default Surcharge, Reasonable Excuse, Section 59 VATA 1994
Tax Law VAT Default Surcharge Reasonable Excuse Section 59 VATA 1994

Case Brief

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Parties

London Needs Cooling Limited

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether a partial late payment due to alleged HMRC system fault constitutes a reasonable excuse under Section 59 VATA 1994 for the purpose of reducing the default surcharge base amount.

Ratio Decidendi

The reasonable excuse defence under Section 59 VATA 1994 applies only to the existence of a default, not to the calculation of the surcharge amount. Since the Appellant admitted no reasonable excuse for the late payment of £9,222.64, a default occurred for the full VAT liability, and the surcharge must be calculated on the entire outstanding amount as of the due date.

Court Disposition

Appeal dismissed

Orders

  • The default surcharge of £5,883.39 is upheld.