No special circumstances

Late registration penalty

A theatrical production company should have registered for VAT in January 2012 but did not notify its liability until May 2014. HMRC imposed a late registration penalty of £41 666 (the net tax liability for the late period was £347 222). This was a 12% penalty – the minimum for being more than 12 months late was 10% of the net tax liability. The issue in dispute was the level of the penalty and whether the special circumstances claimed by the taxpayer meant it should be reduced to nil.

The company director said it was only when he changed accountants that the need to register was explained to him. He registered as soon as this advice was given and his lateness was not deliberate. He cited a previous First-tier Tribunal case  James Hillis (TC2611) involving a solicitor who was late registering because he was so busy and...