Were Covid trading problems a ‘reasonable excuse’ for paying VAT late?

The company MC incurred total default surcharges of £247 151 for late payments made on returns submitted between 2020 and early 2022. It claimed that it had a reasonable excuse because of genuine cash flow and trading problems caused by the Covid pandemic. 

The director commented that the company’s main activity was to carry out ‘highly specialised construction work for the NHS and other government’ bodies. During 2020 all of its contracts related to the NHS. The NHS could not pay its invoices on time however because its finance teams were either working remotely or shielding. The director gave the example of a contract at a hospital in Glasgow that took 110 rather than 32 weeks as a result of the pandemic incurring higher costs longer payment periods and staffing issues for the company. 

The judge agreed that the company had been ‘let down seriously...