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The butterfly effect
Key points
- A penalty must be ‘manifestly unfair’ to be struck out.
- A minor mistake can result in a substantial penalty.
- The importance of understanding the payment on account rules and how default surcharge applies.
- The fact that no payable liability may arise on early defaults can lead to complacency.
- It was inconsistent that HMRC should benefit from mistakes made by taxpayers in its favour.
- Replacement of the default surcharge with a fairer system is overdue.
Default surcharge has always been a blunt instrument inflicting random damage on those who fail to pay their VAT on time; occasionally however a case comes before the tribunals that is so extreme it still takes my breath away. Remember that following the...
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