Eastwell Manor Limited v Commissioners for Her Majesty's Revenue and Customs
Decision date: 5 May 2011
Neutral citation: [2011] UKFTT 293 (TC)
Overall AI summary confidence: medium
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
Eastwell Manor Ltd appealed a 15% VAT default surcharge of £18,453.66 after a BACS payment of £123,024.44 reached HMRC on Monday 8 November 2010 rather than the due Friday 5 November 2010 (the seventh electronic extension day was a Sunday). The Tribunal held the company did not have a reasonable excuse because its cashflow difficulties were not sudden or unforeseeable and it could have obtained funds or sought Time to Pay before the due date. The Tribunal also held the surcharge, while harsh, was not disproportionate and dismissed 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
A taxpayer’s longstanding or foreseeable cashflow problems will not amount to a reasonable excuse where a reasonable businessperson could have arranged funds or applied for Time to Pay before the payment deadline. In assessing proportionality of VAT default surcharges, tribunals may take account of factors such as whether the default was deliberate or innocent, the number of days late, the absolute amount of the penalty and whether part payment could have reduced the surcharge.
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 seven-day electronic payment concession and the availability of HMRC Time to Pay arrangements are relevant mitigating factors in proportionality assessments. Also, standard HMRC refusal letters stating proportionality cannot be considered are legally incorrect and may require amendment.