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Taxpayers – Watch out for Bank Holidays!

HMRCIn a stern warning to taxpayers that they should keep a close eye on their diaries, a health and safety company was hit with a £12,000 penalty after forgetting about a bank holiday and paying its VAT liabilities four days late.

The company owed VAT of just under £80,000 but the person responsible for paying it had overlooked the May bank holiday with the result that the deadline was missed. It was not the first time that the company had failed to pay VAT on time and Her Majesty’s Revenue and Customs (HMRC) imposed a penalty of £11,923.

On appeal to the First-Tier Tribunal, the company argued that the lateness of the electronic payment was the result of an honest mistake and that the penalty imposed was both wholly disproportionate and unfair given the brevity of the delay.

However, in dismissing the challenge, the Tribunal noted that the VAT surcharge regime was ‘readily understandable’ and ruled that the company had failed to establish a ‘reasonable excuse’ for the delay. Although the amount of the penalty was ‘certainly substantial’, it was not disproportionate.

Observing that the company’s record of earlier defaults would have made it well aware of the financial consequences if payment was again delayed, the Tribunal described the bank holiday error as ‘unfortunate’, but concluded: “An oversight or a mistake, albeit honestly made, is not a reasonable excuse”.

Storage Equipment Safety Service Limited v The Commissioners for Her Majesty’s Revenue and Customs. Case Number: TC03070