Mediaclash Limited v Her Majesty's Revenue & Customs

Decision date: 16 November 2009

Neutral citation: [2009] UKFTT 306 (TC)

Overall AI summary confidence: medium

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Short overview

This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.

AI confidence in this short overview: medium

Mediaclash Ltd appealed against a 5% default surcharge for late VAT payment for period 12/08. The tribunal found the late payment was caused by loss of a major client, redundancies and their costs, delayed customer payments and cashflow pressure, and applied the statutory test for "reasonable excuse." It held that a reasonable competent businessman in comparable circumstances would not have avoided the insufficiency of funds and, on that basis, found a reasonable excuse and allowed the appeal.

Ratio decidendi

This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.

AI confidence in this ratio decidendi summary: medium

Where insufficiency of funds is relied on as a "reasonable excuse" for late VAT payment the tribunal must assess the taxpayer against a hypothetical reasonable competent businessman exercising due diligence and reasonable foresight to decide whether the insufficiency could have been avoided; a combination of business shocks (such as loss of a major client, necessary redundancies and widespread late payments by customers) can, in appropriate circumstances, amount to a reasonable excuse for default.

Obiter dicta

This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.

AI confidence in this obiter dicta summary: medium

The decision records and comments on differing judicial approaches as to whether an underlying cause must be "unforeseeable or inescapable," suggesting that treating foreseeability as decisive may be too narrow and that focus should be on the underlying causes rather than simply noting insufficiency of funds.

Warning

The chunk contains substantial repetition of the same factual and legal material.

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