Judge criticises HMRC over two-year VAT processing delay

Summarised from 2 outlets · Updated 14 Nov, 06:08 · Archive

A tribunal judge has criticised HMRC for failing to process a VAT return for over two years and then penalising the firm involved.

WCF Limited, formerly West Cumberland Farmers, successfully challenged penalties relating to VAT payments for its Herding Hill Farm campsite near Hadrian's Wall. The company claimed a VAT repayment of £4,445.16 in November 2023, which it believed it could offset against a subsequent VAT liability. HMRC did not process the repayment until March 2026.

The First-tier Tribunal found that although the VAT had technically been paid late, WCF had a reasonable excuse and overturned the penalties of £511.64. The tribunal's judgment, dated 26 October, stated: 'HMRC simply failed to process the 11/23 return when it was received' and 'appears to have done nothing until 2025 when its failure to process VAT payments made by WCF and some returns came to light.' The tribunal noted that WCF had previously enjoyed a good VAT compliance record and had chased HMRC at least six times between April 2025 and March 2026.

HMRC had also failed to record other payments and returns, resulting in further penalties which were subsequently cancelled. The tribunal said there was 'no evidence before us of why HMRC failed to process receipt of the various payments and returns and HMRC has not offered an explanation in its written submissions.' HMRC failed to attend the remote tribunal hearing on 5 October.

How it is being reported

• Judge blasts HMRC for penalising firm after two-year VAT blunderA tribunal judge has criticised HMRC after it took more than two years to process a VAT return, penalised a Cumbrian firm and failed to attend the hearing.Whitehaven News · 14 Nov, 05:00
• Judge blasts HMRC for penalising firm after two-year VAT blunderA tribunal judge has criticised HMRC after it took more than two years to process a VAT return, penalised a Cumbrian firm and failed to attend the hearing.News & Star · 14 Nov, 05:00

In this story: WCF Limited · HMRC · Herding Hill Farm · Hadrian's Wall · Cumbria

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