Marble Commercial Contracting Limited TC 0656 [2018] – Default Surcharge

The First Tier Tribunal has dismissed the appeal in relation to the default surcharge where the appellant failed to make a payment under the payment on account regime.

The appellant paid their VAT electronically to HMRC on the 7th day of the month following the end of the VAT period. However, as the appellant was registered to pay VAT under Payments on Account scheme (POA), VAT liability is required to be paid by the last day of the month following the end of the VAT period. This is slightly different as the additional 7 days normally allowed by electronic payments is not allowed for businesses subject to Payments on Account regime.

The taxpayer had put forward several reasons and excuses for the late payment including staffing problems, bank not processing payments on the last day and misunderstanding. These were not considered valid by the Tribunal and the appeal was dismissed.

Tax investigation closed after one meeting

This was a tax investigation that HMRC opened into a retail outlet. Having considered the case and the background, we invited HMRC officers for a meeting at our client’s premises where we explained in detail our client’s position and the nature of the trade. The HMRC inspectors asked a number of questions and were satisfied after the first meeting and decided to close the case after a few weeks without making any adjustments. The client was naturally very nervous at the beginning and was quite pleased with the outcome. We are grateful to the HMRC officers for their cooperation and quick understanding of our client’s business.

Our analysis: This case could have dragged on for a long time and is a good example of cooperation. The main factors for early closure were establishing a good relationship with the HMRC inspectors and providing the required information in an effective manner.