The taxpayer sold food at mobile food stands at festivals and submitted its April 2023 return a claim for £7 450 in August 2023. It should have been submitted by 7 June 2023 but there were delays with the company’s application to register and it was also the busy summer trading period. HMRC raised queries about the return and did not repay it until December 2023. In the meantime the taxpayer submitted the July 2023 return which showed VAT due of £10 624 payable by 7 September 2023. The director paid £3 174 believing that the refund for the previous period would clear the liability. HMRC issued a penalty for £424.98 on the basis that the tax owed for period July 2023 was overdue by more than 30 days.
For periods beginning on or after 1 January 2023 a 2% penalty is issued if a payment is...
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