Summer 2007 Newsletter Content Reverse Charges Beyond The Grave Director's Two Hats IHT Plan Fails VAT And Cash Amnesty International An Inspector Calls Losing A Bet Caring Doctors TAAR Brush Made To Be Broken Flat VAT Safe Deposit Tax On Gas Working Late Composite Companies Excuses, Excuses

Excuses, Excuses Paying your VAT late can become a very expensive habit. The first time you do it they send you a warning; the second time, they may charge you 2% of the outstanding VAT - in theory, for only being a day late - and after that it goes up to 5%, 10% and 15%. If you are always a week late paying, the 15% surcharges work out at an annual rate of interest of 780%. There are cheaper sources of finance available, even from loan sharks! If you make a mistake once, it's not the end of the world - you get the warning, then you file the next four returns and payments on time and you have cleaned up your record. If you are regularly late, it's worth doing almost anything to get rid of the surcharge liability. One thing you can do is plead a "reasonable excuse" for your lateness. This means that you acted in the way a "reasonable trader" would and the late payment was somehow beyond your control. The law says that simply "not having enough money" won't do - but if you can show that there was a good reason for this, such as a bank error or a major customer paying you late, it might be accepted. Customs are unsurprisingly sceptical when people offer them excuses. There are some things that are generally accepted, but they will want to be sure that they actually happened - and the same excuse will cease to be reasonable if it crops up again. What is surprising is that the VAT Tribunal is much less sceptical than Customs - they find in favour of the trader about half the time. So a reasonable excuse appeal is not a lost cause just because Customs won't accept it. If you have problems paying your VAT or filing your return on time, we will be happy to discuss ways of avoiding the surcharge regime.