Derek Shaw Racing Limited v The Commissioners for HMRC
Decision date: 16 January 2024
Neutral citation: [2024] UKFTT 83 (TC)
Overall AI summary confidence: high
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: high
Derek Shaw Racing Limited appealed a Schedule 19 Finance Act 2021 penalty for non‑payment of deferred VAT and for not entering payment arrangements by the 30 June 2021 deadline. The Tribunal found DSRL had a reasonable excuse for failing to pay (insufficient funds caused by COVID‑19) but did not establish a reasonable excuse for failing to agree payment arrangements by the deadline, and upheld the penalty.
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: high
The Tribunal treated the statutory defence under Schedule 19 FA 2021 as requiring a reasonable excuse for each distinct failure alleged (both non‑payment and failure to enter into payment arrangements). Parliament’s omission of section 71 VATA from Schedule 19 indicates that lack of funds can, in principle, constitute a reasonable excuse, but a taxpayer must show a reasonable excuse specifically for the failure to agree payment terms by the statutory deadline (30 June 2021).
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 Tribunal noted it assesses whether a reasonable excuse existed as at the statutory deadline, not at the date of penalty assessment. It also observed that prioritising other creditors over HMRC and failing to engage in meaningful negotiation or to provide evidence of efforts to agree terms will generally undermine a claim of reasonable excuse for not entering payment arrangements.