• Send us a message

    Fill in our form and we'll get back to you as soon as possible

    Please enter name
    Please enter your telephone number
    Please enter your email address
    Please let us know which of offices would most convenient for you?
    Please enter the details of your enquiry
    Please enter the verification code
    Send us a message
  • Services for you
  • Services for business

Delay in VAT Payment Proves Costly

Companies are often tempted to delay making larger payments, such as tax, until the last possible moment. However, the dangers attached to such a strategy can be significant. In one cautionary tale, a newspaper publisher was hit with a £70,000 penalty after putting off paying its VAT by a single day.

The publisher paid a VAT bill of more than £3.5 million in full, but one day too late. HM Revenue and Customs (HMRC) responded by levying a penalty of £70,906, representing 2 per cent of the overall bill. The First-tier Tribunal later overturned the penalty, ruling that it was disproportionate.

However, in allowing HMRC's appeal and reinstating the penalty, the Upper Tribunal found that, although it might be considered harsh, it was not plainly unfair. Although the penalty might be viewed as large in absolute terms, it was not arbitrary in that its size was dictated by the amount of the overall VAT bill. The mere fact that payment was delayed by only 24 hours did not render an otherwise proportionate penalty disproportionate.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.