Covid and birth of child was not a ‘reasonable excuse’ for late VAT payment

The taxpayer paid its VAT late for September 2020 and March 2021 periods so was subject to a 5% default surcharge when it paid part of the tax on its June 2021 return late. The surcharge was applied to the tax unpaid on the due date of 7 August 2021 which was £45 042.

The sole director – represented at the tribunal by his office manager – claimed that his absence from work for three weeks from 22 July due to him and his partner having Covid was a reasonable excuse for the late payment. It was also the time when his child was born.

HMRC rejected the taxpayer’s request for the surcharge to be cancelled on the basis that the director should have had procedures in place to cover the absence of key staff.

The First-tier Tribunal agreed with HMRC. The judge said the birth of a...