Insufficient checks led to late paid tax

The taxpayer manufactured and supplied refrigeration units and was represented at the tribunal by its managing director (P). The appeal concerned default surcharges for late VAT payments in eight successive periods from March 2021 to December 2022.

It was accepted that the surcharges had been calculated correctly. P claimed that there was a ‘reasonable excuse’ for the late payments namely the appointment of a new financial controller in 2020 whose duties included all matters relating to the submission of VAT returns and payments. There was a reference in the tribunal report to the ‘inefficiency negligence and criminal behaviour of an employee’.

The legislation at VATA 1994 s 71(1)(b) states that a penalty or surcharge can be withdrawn if there is a ‘reasonable excuse’ for the lateness – however reliance ‘on any other person’ is specifically excluded as an excuse as is the lack...