Pracyva Ltd v The Commissioners for HMRC
Decision date: 18 December 2023
Neutral citation: [2024] UKFTT 32 (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
This appeal concerned Pracyva Ltd's challenges to VAT default surcharges for periods 9/21 and 12/21. The Tribunal found the 12/21 surcharge had been cancelled by HMRC and dismissed the appeal against the 9/21 surcharge, holding the taxpayer's time to pay request was made after the due date and that the taxpayer did not have a reasonable excuse for late payment.
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 applied s108 Finance Act 2009 to hold that a taxpayer is protected from penalties where a timely request for deferral (or time to pay) is made before the tax due date and is subsequently agreed, but s108 does not relieve penalties that have already become payable before a request is made. The Tribunal also held that ordinary cashflow problems, predictable trading difficulties (including slower customer payments), and a taxpayer's belief that HMRC would grant time do not constitute an objectively reasonable excuse for late VAT payment.
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 judgment suggested (obiter) that a taxpayer’s genuine but uncommunicated belief that HMRC would grant time to pay is not necessarily an objectively reasonable excuse, and that where a principal officer handles HMRC contact, reasonable contingency arrangements (such as a secondary contact) are expected; absence of such arrangements may weaken a reasonable excuse claim.