No set off

Awaiting a CIS tax repayment was not a reasonable excuse for the late payment of VAT

The company was in the pipeline business and thus within the construction industry scheme (CIS). It did not have gross payment status and so suffered deduction of tax at source on payment of its invoices. It was already within the default surcharge regime when it failed to pay its VAT for the period to November 2015. A default surcharge was raised and the company appealed against it to the First-tier Tribunal. Its ground was that it had paid late due to ‘receiving late payment from HMRC of CIS tax suffered in 2014-15 which was not received until March 2016 and in turn had severe negative consequences on cash flow’.

The tribunal reviewed the case law. Although insufficiency of funds is not itself a reasonable excuse the underlying cause of the insufficiency can be...