Covid not judged reasonable excuse for unpaid VAT

Hawksmoor Construction Limited (Hawksmoor) was a small, single-director business that constructed domestic buildings. Its September 2020 VAT return was submitted on time, but part of the payment was received after the deadline, so therefore a surcharge liability notice was issued. As this was the first default, Hawksmoor did not have to pay a surcharge, but a 12-month surcharge period commenced.

Hawksmoor then defaulted again in the March 2021 quarter and subsequently paid a 2% surcharge.

These surcharges were not disputed by Hawksmoor.

A third default occurred for the June 2021 quarter, as the majority of the VAT due was unpaid at the deadline. A surcharge of 5%, amounting to £2,252.12, was imposed. Hawksmoor appealed against this third surcharge to the first tier tribunal (FTT) (TC08532).

Totally unprepared

Hawkmoor’s office manager, Rebecca Smith, represented the company.

The FTT first noted that Smith had not received the 41-page bundle HMRC had prepared for the hearing. Smith was offered a copy and some time to digest it, but opted to plough on without. Due to the nature of the dispute, the FTT was happy this would not prevent Smith from receiving a fair hearing.