Case: Appeal against default surcharge allowed

[2019] UKFTT 0098

Judge Nicholas Aleksander, Rebecca Newns

Decision released 13 February 2019

Value added tax – Default surcharge – Failure by HMRC to prove that surcharge liability notice was issued – Appeal allowed.

Once Upon A Time Marketing Ltd [2019] TC 06981


Once Upon A Time Marketing Limited (the Appellant) appealed against a default surcharge issued by HMRC for two VAT accounting periods in 2017. The relevant legislation is found at VATA 1994, s. 59(4) and allows HMRC to apply a surcharge to a taxpayer who is in default through failure to pay outstanding VAT or render a return. However, a surcharge is dependent upon a surcharge liability notice (SLN) having been issued, C & E Commrs v Medway Draughting & Technical Services Ltd (1989) 4 BVC 60).

The onus is on HMRC to prove that a SLN has been issued, however, no evidence either electronically or paper copies was produced, see para. 7 of the decision. The FTT following Medway therefore allowed the appeal, see para. 9.


The penalty regime allows a type of suspended sentence where a taxpayer has breached any regulations such as late submission or under-payment on a return via a SLN, should the taxpayer default again in the period covered by the SLN then the surcharge applies. In this case HMRC failed to produce evidence that a SLN had been issued and given the principle established by the High Court in Medway it begs the question why the matter proceeded to tribunal.

For further commentary on the default surcharge regime see In-Depth at ¶60-455 Conditions for a surcharge.

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