HMRC VAT penalty - summary judgement in favour of our client.
HMRC VAT penalty removed after Tribunal found against HMRC.
HMRC VAT Penalty: Summary judgement in favour of tax payer.
HMRC VAT penalty introduction
Our client received a series of VAT penalties totalling over £240,000 following the late payment of 5 late VAT returns. The first late return, which did not result in a VAT penalty, was in respect of period 08/20 which was during the pandemic.
A VAT specialist from our firm reviewed the VAT penalties and we were instructed to lodge a VAT appeal. The grounds of appeal to included that the Surcharge Liability Notice was not received by the Appellant and as such the appeal should be allowed.
Defence
Before the Tax Tribunal it was submitted that the first issue to consider was whether in the absence of agreement, HMRC could prove that they served one or any of the default surcharge notices. The Appellant denied receipt of any of them.
No copy notices had been served or filed. No certificates of service had been filed. No affidavit or witness statement evidencing service had been filed.
HMRC like everybody else was affected by the pandemic. This would affect post rooms. It was simply not good enough in relation to an HMRC VAT penalty for a representative of HMRC to say that documents were served when that representative had no evidence or knowledge of this.
Judgement
Summary judgement was given in favour of our client.
Changes to VAT penalties and interest
For VAT accounting periods starting on or after 1 January 2023 there are new penalties for VAT Returns that are submitted late and VAT which is paid late. The way interest is charged has also changed.
The changes aim to simplify and separate penalties and interest.
Late submission penalties now work on a points-based system.
For each VAT return you submit late, you will receive a HMRC VAT penalty point until you reach the penalty point threshold.
When you reach the threshold, you’ll receive a £200 HMRC VAT penalty. You’ll also receive a further £200 HMRC VAT penalty for each subsequent late submission of a VAT return while you are at the threshold.
If you take over a VAT-registered business as a ‘going concern’ any HMRC VAT penalty points built-up by the business will not be transferred to your VAT registration number. This will be the case even if the VAT registration number is transferred from the previous owner to yourself.
Conclusion
Contact one of our VAT specialists today to schedule a consultation regarding your business and discover how we can assist you in effectively dealing with any HMRC VAT penalty. Contact Solve VAT on 0161 883 2120.
HMRC VAT general enquires can be found at https://www.gov.uk/government/organisations/hm-revenue-customs/contact/vat-enquiries
