Appeals to Surcharge Penalties Now Judged on Proportionality:

Following a rather surprising, but welcome, Tribunal decision regarding an energy company, a 15% Default Surcharge Penalty was overruled on the grounds that it was "plainly unfair".

This case related to a VAT payment that was made one day late, but previous Tribunals had only been able to quash such penalties if the company had exceptional reasons for not making payment on time. Now, the Tribunal is able to look at the amount of the penalty and decide whether it is unfair, or not.

In this case, a £100,000 penalty was deemed grossly unfair given the circumstances, but it is likely that Default Surcharge Penalties for much less will also be overruled in Tribunal.

Companies can appeal such penalties going back several years and we currently act for companies in such positions.