Hanging on the telephone

Reasonable excuse for delay in paying VAT

The taxpayer had been late paying his VAT three times. HMRC imposed a default surcharge. He appealed claiming reasonable excuse. His agent had repeatedly telephoned HMRC to set up a time-to-pay arrangement but the calls were never answered.

The First-tier Tribunal noted that the taxpayer’s cash flow problems caused by late payment of debts would not on its own constitute a reasonable excuse. However through his agent he had done all he could to settle the VAT bill. The agent began calling HMRC on 5 February (payment being due on 7 February) but failed to make contact until 12 February when a time-to-pay agreement was made and adhered to. The problems calling HMRC were ‘unexpected and unforeseeable’.

The tribunal rejected HMRC’s claim that the taxpayer and the agent should have been aware that the phone lines would be busy leading...