MPMH Construction Limited v The Commissioners for HMRC
Decision date: 15 August 2024
Neutral citation: [2024] UKFTT 746 (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
MPMH Construction appealed default VAT surcharges totalling £247,151.18 for periods 02/21–02/22. The tribunal found the company proved on the balance of probabilities that COVID‑19 related delays in NHS payments, reduced productivity and increased costs caused unavoidable cashflow shortages and, viewed objectively with the company's attributes, amounted to a reasonable excuse. The tribunal allowed the appeal and dismissed the surcharges.
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
The tribunal held that an objectively reasonable excuse can exist where unforeseeable external events (here, pandemic-related NHS payment failures and consequential increased costs) make timely VAT payment impossible for a taxpayer with particular attributes; and that s71(1)(a) VATA’s exclusion of mere insufficiency of funds does not preclude a reasonable excuse when the underlying, proven causes of the shortage are themselves objectively reasonable.
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: low
The judgment suggested that a taxpayer’s prior poor compliance record does not automatically preclude reliance on a later reasonable excuse, and that companies delivering essential public services may reasonably expect different considerations where a government body fails to meet contractual payments during an emergency.
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