Hawksmoor Construction LTD v The Commissioners for HMRC
Decision date: 6 July 2022
Neutral citation: [2022] UKFTT 209 (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
Hawksmoor Construction Ltd appealed a 5% VAT default surcharge for period 06/21, arguing a reasonable excuse for late payment due to staff changes and the director's absence. The FTT found Hawksmoor’s factual account proven but held those facts did not amount to a reasonable excuse because the company could reasonably have arranged delegation, bank access, invoicing or alternative finance. The appeal was dismissed and the £2,252.12 surcharge upheld.
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
A temporary absence of a director (here through illness and childbirth) and resultant administrative disruption does not automatically constitute a reasonable excuse for late VAT payment; the statutory reasonable excuse defence fails where the taxpayer could have avoided the default by reasonable foresight and due diligence (for example by delegating authority, ensuring bank access, issuing invoices promptly, or seeking alternative funding). Insufficiency of funds is not itself a reasonable excuse under s71(1) VATA 1994, unless the underlying cause could not have been avoided with reasonable foresight and due diligence.
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 observed that businesses in a surcharge period should maintain robust procedures to ensure VAT is paid on time (such as earmarking customer payments for VAT and ensuring deputies have authority and bank access) and that HMRC "time to pay" arrangements are a practical alternative taxpayers could seek when facing payment difficulty.