1. This is a penalty case which relates to the submission by the appellant of inaccurate VAT returns (the “returns”) for the periods 1 January 2014 to 30 June 2017 inclusive. The returns understated the appellant’s output tax liability by £24,933.
2. HMRC have assessed the appellant to a penalty (the “penalty”) under Schedule 24 Finance Act 2007 (“Schedule 24”) which amounted, in the first instance, to £3,985.54. This was subsequently reduced on review to £3,846.19. The penalty was assessed on the basis that the inaccuracies in the returns were a result of the appellant failing to take reasonable care.
3. There is no dispute that the aforesaid output tax is payable by the appellant which has paid it and did so with considerable and commendable alacrity once its liability to that output tax had been assessed.
4. The only issue under appeal is the penalty. The appellant accepts that the returns were inaccurate, but has provided a coherent explanation as to why that was the case.
5. In light of this, and for the reasons given later in this decision, we have decided that the appellant did take reasonable care in completing the returns. And we also consider that HMRC’s decision that there are no special circumstances in this case to be a flawed decision. And so we allow the appeal.
Source: FTT
