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Cases relating to Covid-19 are usually of interest as they often set precedence due to the nature of the pandemic.  In this particular case a small business was experiencing serious cashflow issues as a result of the pandemic, in particular relating to staff having to isolate at very short notice. 

This in turn caused the company to fall behind with its VAT payments and was then subject to surcharges. The company chose to appeal these surcharges, based upon the fact that although a shortage of funds is not a reasonable excuse in itself, the fact that the shortfall was due to an event outside the normal course of business could constitute a reasonable excuse.

In this particular case, the company was in fact successful in its appeal, and this was based on the fact that the company provided solid evidence to support its arguments.  The company provided a detailed chronological report detailing the issues it faced and backed this up with supporting schedules. This attention to detail in the evidence provided was key in demonstrating to the tribunal that the taxpayer’s arguments had real merit.

This case demonstrates perfectly the importance of accurate and detailed record keeping, and the advantages of this in terms of any claim against the HMRC, and the success of this case is a learning opportunity for all involved in tax litigation.

An excellent example of the importance of a tax litigation team that are knowledgeable, experienced and proficient in the art of challenging the status quo by applying subtle empathy to achieve the results for their clients. At LEXeFISCAL we believe in thinking inside the law before we think outside the box. Check out our tax services at lexefiscal.com.