£70,000 fine for one-day late VAT return

With the VAT tribunal recently fining a company £70,000 for paying its VAT bill just one day late, accountants James Cowper Kreston says the case should serve as a reminder of HMRC’s increasing tough stance on tax collections and the need to keep on top of your VAT payment schedule.

The case involved regional newspaper publisher Trinity Mirror, which was required to make VAT Payments on Account (POA) paying two monthly instalments followed by a third balancing payment.  Whilst the company’s first two payments and VAT return was submitted on time, their final balancing payment was one day late.  The overdue instalment coupled with a default surcharge due to previous late returns meant that Trinity Mirror was fined over £70,000.

Meera Rajah, VAT Senior Manager at James Cowper Kreston, comments: “This decision contrasts with other cases where a default surcharge was considered disproportionate and so this remains an area of risk and uncertainty.  It is really important that businesses recognize and understand the potential impact of either late submission or late payment.

“It is crucial to remember that, no matter what the size of the company, if your VAT is overdue then it will alert HMRC that your company is potentially insolvent.  To avoid such a mishap, it is imperative that you understand the solutions available and keep on top of your VAT returns.”