No excuse for late filing of Soft Drinks Industry Levy return

In Shivsagar Enterprises Ltd v HMRC [2022] TC08681, the First Tier Tribunal (FTT) dismissed an appeal against penalties for the late filing of a soft drinks industry levy return. The taxpayer did not have a reasonable excuse for their failure to file on time, and even if they did they did not remedy the failure without unreasonable delay.

The Soft Drinks Industry Levy was introduced in 2018 and applies to packagers and producers of drinks which have added sugar over a certain limit.

• It is a self-assessable tax with returns being required for reporting periods fixed at 30 June, 30 September, 31 December and 31 March. Filing deadlines are set at 30 days after the end of each reporting period, i,e, 30 July, 30 October, etc.
• Penalties apply under Schedule 55 FA 2009 for failure to register, late filing, late payment and incorrect returns. Late return penalties increase incrementally where there are multiple offences within a 12-month period and the period can be extended by HMRC.

Shivsagar Enterprises Ltd had an obligation to file a return to 30 June 2020 and this was due by 31 July 2020.

• The return was filed 98 days late and HMRC issued a £100 late filing penalty.
• Their next return was filed 17 days late resulting in a £200 penalty and the next three returns were also late, by 14, 28, and four days respectively. This resulted in further penalties of £300, £400 and £400. After the first penalty, each time a penalty was charged HMRC also extended the penalty period.
• Shivsagar appealed the fifth £400 penalty to HMRC who denied their appeal. They appealed to the FTT on the basis that the fifth late filing was due to HMRC’s website not working.

The FTT dismissed the appeal:

• The return was late.
• The penalty was validly issued by HMRC as the default was within the penalty period.
• The appellant did not show that HMRC’s website was not working properly at the material time despite claiming to have video evidence, and even if this was the case it was not when viewed objectively a Reasonable excuse.
  • The appellant logged into the website three times four days before the filing deadline. If the website was not working they should have tried again and did not do so until four days after the deadline, despite the consequences given the earlier defaults, of missing the filing deadline.
  • Even if there was a reasonable excuse there was no evidence to show that any website issues were occurring any later than one day after the filing deadline, meaning that the appellant did not remedy the failure without unreasonable delay.

Whilst the FTT found that HMRC had failed to correctly consider a reduction in the penalty due to Special circumstances they could not find any grounds to reduce the penalty which was upheld in full.

Useful guides on this topic

Soft Drinks Industry Levy
What is the Soft Drinks Industry Levy? When is tax payable? When are returns due? What drinks are exempt? What are the penalties for compliance failures?

Penalties: Late Filing
Late returns can be subject to a mix of fixed and tax-geared penalties. What penalties apply for late filing? Which penalty will apply and when? 

How to appeal a tax penalty (subscriber version)
What are the steps in making an appeal? What should your appeal cover? What does recent case law say on this topic?

Grounds for Appeal: Reasonable excuse
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?

External link

Shivsagar Enterprises Ltd v HMRC [2022] TC08681