Were coronavirus and childbirth reasonable excuses for lateness?
A company paid its VAT bills late. The director argued that there was a reasonable excuse due to coronavirus, and his partner giving birth. HMRC rejected this, so he appealed to the tax tribunal. What was the outcome?
Hawksmoor Construction Ltd (H), paid its VAT liability for the September 2020 and March 2021 periods late. This triggered a default surcharge notice, and when part of the next quarter’s liability was paid late, HMRC imposed a 5% penalty. The sole director of H tried to appeal against the penalty on the basis that the due date coincided with his absence from work for three weeks. This was due to him and his partner contracting coronavirus and being required to isolate, and also that his partner gave birth during this period.
The First-tier Tribunal rejected the reasonable excuse appeal. It agreed with HMRC that, whilst contracting coronavirus was unfortunate, there should have been provisions in place to ensure deadlines were met in the absence of key staff. It also stated that the birth of a child was not an “unforeseen event”, and observed that H appeared to have collected the VAT from customers but used this to pay business expenses rather than setting it aside to pay HMRC. As a result, the bar to persuade the tribunal was set very high, and H fell short of this.
Related Topics
-
CT61
-
Government finally confirms date for capital goods scheme reforms
The government has finally confirmed when long-awaited changes to the capital goods scheme (CGS) will take effect. The reforms, first announced as part of a wider review of VAT simplification, will come into force on 29 July 2026. What does this mean for businesses?
-
The tax‑free perks league table
You know that there are certain items or services your company can pay for without incurring a tax charge, but you’re hazy on the details. What are the most valuable tax-free perks for owner managers and which ones are you missing out on?