Scrimsign (Micro-electronics) Ltd succeeded in their argument that the cause of their late VAT returns payment was due to the “insufficiency of funds” caused by the recession. Additionally, the attitude of the banks and existing customers, who were dictating unfair terms and conditions, was also accepted as an explanation.
The tribunal concluded that their temporary lack of funds was not triggered by any carelessness on their own part, but by the struggling economy. This prevented them from meeting their VAT obligations timeously. Scrimsign Ltd believed that the effects of the recession were difficult to predict and could not reasonably be avoided. As all outstanding sums were paid as soon as it was possible to do so, it was accepted that they had a sufficient excuse for their late payment.
This is an interesting decision that could open the door to many similar cases. In this case, Scrimsign Ltd would appear to have been a creditable witness and the Tribunal Chairman has been sympathetic to their genuine trading difficulties.
Whether other traders could present the same strong case remains to be seen. What we can say is that most businesses that have been struck with similar difficulties and have all tried their level best to pay their VAT on time.
If you would like to discuss this or any other VAT issues please feel to contact our experienced VAT Specialist, Nigel Smith, on email@example.com for an initial free consultation.