This unsuccessful appeal concerned a default surcharge and the question of whether the taxpayer company had a reasonable excuse for non-payment (Mareel Ltd v HMRC  UKFTT 283 (TC)).
The appeal failed for the following reasons:
- “We are satisfied that it is more likely than not, and so we find as a fact, that the 09/20 default surcharge notice was received by Mareel’s accountants and so it was properly served.”
- “Insufficiency of funds is not of itself a reasonable excuse, although the cause of the insufficiency may be. … So far as we can see, on the limited information we have, the reason behind Mareel’s default in August 2021 (when it failed to pay the VAT for 06/21 on time) was that it was juggling a variety of costs (suppliers, increased employee numbers and PAYE/VAT) which were increasing as the volume of business expanded, but where the company’s activity had not yet (not least because of the 60-day terms given to customers) turned into cash. Assuming that it knew of and intended to comply with its VAT payment obligations, Mareel should have anticipated and managed these cash flow pressures, which would not have been difficult to foresee.”
- There was no reasonable basis to think that another time-to-pay arrangement would have been possible.
- The surcharge was neither “plainly unfair” nor “wholly exceptional”.