No reasonable excuse for submitting late VAT returns and payments

The taxpayer was registered for VAT in February 2014. In November 2017 HMRC told the taxpayer it would in future need to make monthly VAT payments on account because its total VAT liability in the previous year exceeded the £2.3m threshold (VATA 1994 s 28(2A). The letter clearly explained the terms of the payments but the directors did not note the fact that businesses subject to payments on account do not have the extra seven days to submit and pay VAT returns ie the deadline date is one month after the end of the period and not one month plus seven days.

The company’s VAT return for February 2018 was submitted on 9 April 2018 and the balancing payment for the quarter was made on 7 April 2018. The deadline in both cases was 31 March so HMRC imposed default surcharge penalties.

The company’s head of...