There has just been a surprising yet welcome decision from the First Tier Tax Tribunal on a VAT default surcharge case. The default surcharge regime applies tax-based penalties (2 per cent, 5 per cent, 10 per cent, then 15 per cent) for late submission and/or payment of VAT returns. Penalties are not mitigated if  the return is late by only a day or two.

In this case, Enersys Holdings UK –  a large energy company operating non-standard tax periods – misunderstood  the due date for its 12/07 VAT return and submitted the return and payment just one day late. This resulted in a surcharge of £131,881 being imposed by HMRC.