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Struggling Company Penalised for Delaying VAT Payment by One Day

HM Revenue and Customs (HMRC) takes a zero tolerance approach to late payment of tax, as one struggling company found out when it was hit with a 15 per cent surcharge for paying its quarterly VAT bill just one day too late.

The small technology company explained that it had been struggling in the recession and that it was not in a position to pay the £12,851 bill before receiving a payment from its biggest customer. However, HMRC did not relent and levied a surcharge of £1,927.

In rejecting the company’s appeal against that penalty, the First-tier Tribunal noted that insufficiency of funds was not an acceptable excuse for late payment. Whilst the company was encountering cash flow difficulties, it had failed to show that the delay in payment was caused by some unforeseeable or inescapable event.