Disproportionate VAT penalty

Enersys Holdings UK Ltd was the representative member of a VAT group. HMRC had agreed that the company submit its VAT returns and payments on a non-standard period basis under which its returns were due on 30 January 2008. In the event the return and payment were received by Customs on
31 January 2008.

This was not the first time that Enersys had been late with its return so HMRC imposed a 10% default surcharge penalty. Later the penalty was reduced to 5% in light of Customs accepting that the company had reasonable excuse for an earlier default.

Enersys said the reason for the late January return was due to a simple mistake of the finance manager looking at the wrong date.

The First-tier Tribunal accepted that this was a human error but said this could not constitute reasonable excuse.

The appellant’s alternative...