UPR Services Ltd v Revenue & Customs (VAT - PENALTIES : Default surcharge) [2015] UKFTT 415 (TC) (20 August 2015)

UPR Services Ltd v Revenue & Customs (VAT - PENALTIES : Default surcharge) [2015] UKFTT 415 (TC) (20 August 2015)

The appellant did not have a reasonable excuse for late filing and payment of VAT returns, as adverse economic conditions, bad weather, and reliance on a bookkeeper are normal business risks. HMRC's delay in reallocating CIS deductions did not constitute a reasonable excuse, as defaults continued even after credits were available. However, the surcharge amount should be recalculated based on the effective dates when CIS deductions should have been available to the appellant.

Citation
[2015] UKFTT 415
Parties
Appellant: UPR Services Ltd; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
20 August 2015
Procedural Posture
VAT Default Surcharge Appeal / First Tier Tribunal (tax Chamber) Substantive Decision
Outcome
Appeal dismissed in respect of liability for default surcharge; allowed in part regarding calculation of surcharge amount.
Legal Topics
VAT Default Surcharge, Reasonable Excuse, Construction Industry Scheme (cis), Late Filing and Payment, Set Off of Tax Credits
Tax Law VAT Default Surcharge Reasonable Excuse Construction Industry Scheme (cis) Late Filing and Payment Set Off of Tax Credits

Case Brief

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Parties

UPR Services Ltd

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether the appellant had a reasonable excuse for late filing and late payment of VAT returns under the default surcharge regime
  2. 2 Whether HMRC's delay in setting off CIS refunds against VAT liabilities constitutes a reasonable excuse
  3. 3 Whether the amount of surcharge should be recalculated based on effective dates of CIS set-off

Ratio Decidendi

The appellant did not have a reasonable excuse for late filing and payment of VAT returns, as adverse economic conditions, bad weather, and reliance on a bookkeeper are normal business risks. HMRC's delay in reallocating CIS deductions did not constitute a reasonable excuse, as defaults continued even after credits were available. However, the surcharge amount should be recalculated based on the effective dates when CIS deductions should have been available to the appellant.

Court Disposition

Appeal dismissed in respect of liability for default surcharge; allowed in part regarding calculation of surcharge amount.

Orders

  • Default surcharge is due; appellant did not have a reasonable excuse for late filing or payment.
  • The amount of outstanding VAT for each period must be recalculated as if CIS deductions were reallocated on 19 April in each relevant year; surcharge to be amended accordingly.