Pracyva Ltd v Revenue And Customs: VAT Default Surcharge and the Requirement for HMRC Agreement

• The case involves an appeal regarding VAT default surcharge and the requirement of an agreement by HMRC to TTP (Time to Pay) before payment of VAT is due.
• Section 108 of the Finance Act 2009 is considered in the case.
• The section states that a taxpayer is not liable to a default surcharge if they make a request to HMRC for payment deferment before the due date and it is subsequently agreed by HMRC.
• There is a distinction between subsections (1) and (2) of section 108, with subsection (1) requiring HMRC’s agreement to the deferral and subsection (2) stating that certain penalties are not due if the taxpayer would become liable to them between the request date and the end of the deferral period.
• The critical event is the taxpayer making a request before the due date.
• The tribunal concluded that an agreement by HMRC to TTP is not required before payment of VAT is due, but the taxpayer’s approach to HMRC is necessary before the due date.
• The tribunal also found that a reasonable excuse was not established in this case.

Source: bailii.org

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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