Reasonable Excuse

CVC’s latest newsletter, issued today and available on our website looks at two recent ‘reasonable excuse’ cases.

Angus Alliance Painters Ltd appealed against a default due to a change in their bank’s terms and conditions in making electronic payments. Although advertised as an improvement to services the bank’s “new” timings resulted in an additional day before the monies were transferred to the recipient’s account. The taxpayer’s view that an additional day was not an improvement and the fact that the change was mentioned in a brochure but with no implementation date was seen as a reasonable excuse by the Tribunal.

The case of Binap shows the importance of establishing with HMRC the basis for a default surcharge being issued. The taxpayer appealed on the basis that the period in question was subject to an agreed Time To Pay agreement and late payment should not have resulted in a surcharge. However, it became apparent that surcharge was issued because the VAT return had been received late. Although HMRC admitted that correspondence regarding the default had not made the reason for it being issued clear, the Tribunal could not allow the taxpayer’s appeal.

Read more on the latest VAT news in our newsletter.