Proper penalty decided

The taxpayer a self-employed roofer was late registering for VAT by five years. HMRC imposed a penalty of £7 204 which they later mitigated to £3 602.

The taxpayer appealed saying he registered for VAT as soon as the Revenue advised him to do so. He believed his turnover exceeded the 2008/09 threshold of £67 000 only in 2008 and 2010. His expected turnover was about £51 000 when he registered in 2013.

The First-tier Tribunal decided the fine was “excessively harsh for someone who has in effect made their [sic] first mistake” – especially given the seriousness with which the taxpayer handled the matter once he knew he should have been registered.

The judge said the legislation in VATA 1994 s 70(1) did not restrict the tribunal to reducing the penalty by particular percentages but allowed reduction to a “proper” amount. A...