I have a client who, I now discover, has been paying their VAT one day late repeatedly. They've been setting the payment up on 7th of the appropriate month but it's not left their account until the following day. They've now done this 6 times in a row. The first I realised was when I received a call from HMRC chasing overdue surcharges of 10% and 15% of the two previous quarters' VAT bills, totalling approx £1,000. HMRC advised that they had written to my client numerous times but my client tells me none of these letters arrived. Whilst this cannot be proved I believe it is at least possible as my client has had numerous fraudulent transactions on their business account which stemmed from stolen post. (They have since moved).
We have appealed the surcharges on the grounds that my client made the payments in good faith, was unaware that there was any issue, and that had HMRC not waived the initial 2% surcharge, the matter would have come to light and been resolved much sooner resulting in a much smaller surcharge. This appeal has been rejected. I am not overly surprised by this, however I feel quite sorry for my client. A £1,000 penalty for a company with a profit before tax last year of £28k for paying VAT one day late, admittedly numerous times, does not really seem comensurate with the offence committed. Is it worth taking this to a tribunal, or am I flogging a dead horse?