Plainly unfair

The taxpayer company was one day late making its VAT payment for the December 2007 period.

Apart from one other delayed payment in the same year of assessment the taxpayer had an otherwise unblemished record since it registered for VAT in 1986.

HMRC issued a default surcharge of £70 000 (reduced from £95 900). The taxpayer appealed.

The First-tier Tribunal noted the amount imposed under the default regime depended on the number of times a taxpayer had paid late. In this case the surcharge of £70 000 was “plainly unfair”.

The judge compared the amount with that imposed on the taxpayer in Enersys Holdings UK Ltd (TC335) in which the Revenue charged 5% on a fifth default over a two-year period – which suggested it would be proportionate for the tax department to follow the pattern in the instant case with the fine being 2% (£52...