No reasonable excuse for paying VAT late

The subject of the appeal was a default surcharge of £523.23 charged for the period ended 3/22 caused by the taxpayer’s late payment of its return liability for that period where tax of £5 232.30 was owed. The taxpayer was subject to a 10% surcharge having paid three other returns late between December 2020 and December 2021. The director of the company claimed there was a reasonable excuse for the late payment because of financial difficulties incurred by its trading business as a recruitment agency.

The First-tier Tribunal referred to the company’s business model observing that it would inevitably lead to cash flow problems because workers employed by the company were paid promptly but customers took longer to pay. He noted that a factoring arrangement or loan facility would have avoided a problem. There was no exceptional event in the trading arrangements that could not be...