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HMRC Tax AppealsUnited Kingdom
Free UK VAT Assessment & Default Surcharge Appeal Letter Template
A VAT assessment appeal is the formal route for challenging an HMRC decision on Value Added Tax — a section 73 best-judgement assessment, a default surcharge, a refusal to register the business for VAT, a compulsory deregistration or a points-based MTD penalty. Use our free United Kingdom template to appeal under section 83 of the Value Added Tax Act 1994 within the 30-day appeal window, with the option to lodge the section 84(3) hardship application that lets the appeal proceed without paying or depositing the disputed VAT.
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VAT Assessment and Default Surcharge Appeal
VAT Act 1994 Section 83 Appeal · 22 May 2026
Penwarden Coastal Hotels Ltd
17 Esplanade Mews, Falmouth TR11 3AT
01326 312840
finance@penwardenhotels.co.uk
22 May 2026
BT VAT — HM Revenue and Customs
BT VAT, HM Revenue and Customs, BX9 1WR, United Kingdom
VAT APPEAL — VALUE ADDED TAX ACT 1994 SECTION 83
Decision Ref: VAT-ASSESS-2026-7714-908 | VAT No: 844 5519 38
Dear Sir or Madam,
I write to appeal under section 83 of the Value Added Tax Act 1994 against a VAT assessment raised under section 73 of the Value Added Tax Act 1994. The decision is dated 4 May 2026 (HMRC reference VAT-ASSESS-2026-7714-908). The appeal is lodged by a company (corporate appellant; appeal signed by a director or company secretary) and is made within the 30-day period prescribed by section 83G of the Value Added Tax Act 1994 (the prescribed deadline is 3 June 2026). I do not accept the offer of review previously notified under section 83A and proceed directly to a notice of appeal; alternatively, where a review conclusion has been issued, this letter responds to that conclusion and constitutes the appeal under section 83F.
I write to appeal under section 83 of the Value Added Tax Act 1994 against a VAT assessment raised under section 73 of the Value Added Tax Act 1994. The decision is dated 4 May 2026 (HMRC reference VAT-ASSESS-2026-7714-908). The appeal is lodged by a company (corporate appellant; appeal signed by a director or company secretary) and is made within the 30-day period prescribed by section 83G of the Value Added Tax Act 1994 (the prescribed deadline is 3 June 2026). I do not accept the offer of review previously notified under section 83A and proceed directly to a notice of appeal; alternatively, where a review conclusion has been issued, this letter responds to that conclusion and constitutes the appeal under section 83F.
1.
APPELLANT IDENTIFICATION
Business name: Penwarden Coastal Hotels Ltd
Capacity: a company (corporate appellant; appeal signed by a director or company secretary)
VAT registration number: 844 5519 38
Unique Taxpayer Reference (UTR): 6271854009
Correspondence address: 17 Esplanade Mews, Falmouth TR11 3AT
Telephone: 01326 312840
Email: finance@penwardenhotels.co.uk
Signatory: Hannah Jane Penwarden (Director)
Capacity: a company (corporate appellant; appeal signed by a director or company secretary)
VAT registration number: 844 5519 38
Unique Taxpayer Reference (UTR): 6271854009
Correspondence address: 17 Esplanade Mews, Falmouth TR11 3AT
Telephone: 01326 312840
Email: finance@penwardenhotels.co.uk
Signatory: Hannah Jane Penwarden (Director)
2.
DECISION UNDER APPEAL
Type of decision: a VAT assessment raised under section 73 of the Value Added Tax Act 1994
Date of decision letter: 4 May 2026
HMRC decision reference: VAT-ASSESS-2026-7714-908
Amount of VAT / penalty in dispute: £28,640
VAT accounting period: 03/26 (quarter ended 31 March 2026)
Statutory framework: Value Added Tax Act 1994 section 83 (appealable decision); section 83A (HMRC review offer); section 83F (appeal after review); section 84(3) (pay-or-hardship)
Appeal deadline: 3 June 2026 (30 days from the date of the appealable decision)
Date of decision letter: 4 May 2026
HMRC decision reference: VAT-ASSESS-2026-7714-908
Amount of VAT / penalty in dispute: £28,640
VAT accounting period: 03/26 (quarter ended 31 March 2026)
Statutory framework: Value Added Tax Act 1994 section 83 (appealable decision); section 83A (HMRC review offer); section 83F (appeal after review); section 84(3) (pay-or-hardship)
Appeal deadline: 3 June 2026 (30 days from the date of the appealable decision)
3.
BRIEF GROUNDS OF APPEAL
HMRC has raised a section 73 best-judgement assessment of £28,640 for the quarter ended 31 March 2026, asserting under-declared output VAT on hotel accommodation supplies. The assessment is based on a mark-up exercise that fails to account for documented out-of-season closure of the Helford House annexe (54 days), staff and family-occupied rooms used as overflow accommodation during the November storm-damage repair works, and a documented reduction in average daily rate following the structural damage to the seaward wing. The figures the appellant has provided to HMRC are supported by the booking system records and contemporaneous insurance correspondence.
4.
HARDSHIP APPLICATION — VALUE ADDED TAX ACT 1994 SECTION 84(3)
Section 84(3) of the Value Added Tax Act 1994 provides that an appeal against a VAT decision will not be entertained unless the appellant has paid or deposited the disputed tax. Subsections 84(3B) and 84(3C) carve out a hardship exemption: an appeal shall be entertained if HMRC are satisfied (on the application of the appellant), or the tribunal decides (HMRC not being so satisfied and on the application of the appellant), that the requirement to pay or deposit the amount would cause the appellant to suffer hardship. The tribunal's decision on hardship is final and cannot be reviewed under the Tribunals, Courts and Enforcement Act 2007. Hardship is determined on the basis of the appellant's overall position, taking into account current liquid assets, ongoing trading position and reasonably foreseeable trading prospects.
Stage 1 — Route requested: an application for hardship relief under section 84(3) of the Value Added Tax Act 1994.
Stage 2 — Financial position of the appellant:
The appellant's management accounts to 30 April 2026 show a net cash balance of £14,210 across the two trading bank accounts, set against accrued creditor liabilities of £61,440 (predominantly trade suppliers and PAYE/NIC due 22 May 2026). Trading for the year to 31 March 2026 was £382,500, down from £451,200 the prior year as a result of the November storm-damage shutdown of the Helford House annexe. The appellant's bank confirmed by letter dated 15 April 2026 that no further facility is available against current security and that the existing £20,000 overdraft must be reduced from 1 July 2026. Payment or deposit of the disputed £28,640 would exhaust the appellant's liquid assets, leave the trade creditors and PAYE/NIC unpaid, and risk the immediate cessation of trading and redundancy of the seven staff.
Stage 3 — Supporting evidence enclosed:
1. Management accounts to 30 April 2026 (PandL and balance sheet);
2. 13-week cash flow forecast to 31 July 2026;
3. Bank facility letter dated 15 April 2026 confirming no further facility available;
4. Statutory accounts for the year ended 31 March 2025;
5. Aged debtors and creditors ledger as at 30 April 2026;
6. PAYE/NIC return for April 2026;
7. Insurance correspondence regarding the November 2025 storm damage and the resulting period of business interruption.
Stage 4 — Determination sought: the appellant respectfully requests that HMRC be satisfied that payment or deposit of the disputed amount would cause the appellant to suffer hardship and that the appeal be admitted under section 84(3)(b) without payment or deposit. Where HMRC is not so satisfied, the appellant invites the First-tier Tribunal (Tax Chamber) to determine the hardship application as a preliminary matter under section 84(3C) at the first directions hearing.
Stage 1 — Route requested: an application for hardship relief under section 84(3) of the Value Added Tax Act 1994.
Stage 2 — Financial position of the appellant:
The appellant's management accounts to 30 April 2026 show a net cash balance of £14,210 across the two trading bank accounts, set against accrued creditor liabilities of £61,440 (predominantly trade suppliers and PAYE/NIC due 22 May 2026). Trading for the year to 31 March 2026 was £382,500, down from £451,200 the prior year as a result of the November storm-damage shutdown of the Helford House annexe. The appellant's bank confirmed by letter dated 15 April 2026 that no further facility is available against current security and that the existing £20,000 overdraft must be reduced from 1 July 2026. Payment or deposit of the disputed £28,640 would exhaust the appellant's liquid assets, leave the trade creditors and PAYE/NIC unpaid, and risk the immediate cessation of trading and redundancy of the seven staff.
Stage 3 — Supporting evidence enclosed:
1. Management accounts to 30 April 2026 (PandL and balance sheet);
2. 13-week cash flow forecast to 31 July 2026;
3. Bank facility letter dated 15 April 2026 confirming no further facility available;
4. Statutory accounts for the year ended 31 March 2025;
5. Aged debtors and creditors ledger as at 30 April 2026;
6. PAYE/NIC return for April 2026;
7. Insurance correspondence regarding the November 2025 storm damage and the resulting period of business interruption.
Stage 4 — Determination sought: the appellant respectfully requests that HMRC be satisfied that payment or deposit of the disputed amount would cause the appellant to suffer hardship and that the appeal be admitted under section 84(3)(b) without payment or deposit. Where HMRC is not so satisfied, the appellant invites the First-tier Tribunal (Tax Chamber) to determine the hardship application as a preliminary matter under section 84(3C) at the first directions hearing.
5.
DETAILED GROUNDS OF APPEAL
The VAT assessment is challenged on the following basis under section 73 and the substantive provisions of the Value Added Tax Act 1994:
The section 73 best-judgement assessment of £28,640 is challenged on three grounds.
1. HMRC's mark-up exercise fails to take into account documented periods of closure or restricted trading. The Helford House annexe was closed from 8 November 2025 to 31 December 2025 (54 days) following structural damage in the November storm event. The booking system records, the insurance loss adjuster's report dated 14 November 2025 and the contractor's reinstatement schedule (enclosed) all confirm the period of closure. Any mark-up exercise that does not deduct the 54 closure days from the annualised room-night assumption produces an inflated output VAT figure.
2. HMRC has not allowed for the documented use of three rooms in the main building for staff and proprietor-family overflow accommodation during the period 9 November 2025 to 19 December 2025 (41 days). Staff occupation is a non-supply for VAT purposes and proprietor-family use is a non-business activity under the Lex specialis rule for closely-related parties applied by HMRC in VATSC03200. The three-room/41-day occupation reduces the assumed taxable accommodation supply by 123 room-nights.
3. The average daily rate (ADR) for the December and February trading periods was reduced by 18% from the prior-year ADR following the requirement to discount the seaward-wing rooms for the documented sea-noise and ongoing repair works. HMRC has applied the prior-year ADR to the assumed room-nights without taking the documented post-storm ADR reduction into account.
A full revised computation is enclosed, supported by the booking system extracts, the insurance correspondence and the management accounts. The revised output VAT for the quarter is £4,860 (less than the £6,720 declared, but the appellant is not seeking a credit at this stage — only that the assessment of £28,640 be vacated).
The section 73 best-judgement assessment of £28,640 is challenged on three grounds.
1. HMRC's mark-up exercise fails to take into account documented periods of closure or restricted trading. The Helford House annexe was closed from 8 November 2025 to 31 December 2025 (54 days) following structural damage in the November storm event. The booking system records, the insurance loss adjuster's report dated 14 November 2025 and the contractor's reinstatement schedule (enclosed) all confirm the period of closure. Any mark-up exercise that does not deduct the 54 closure days from the annualised room-night assumption produces an inflated output VAT figure.
2. HMRC has not allowed for the documented use of three rooms in the main building for staff and proprietor-family overflow accommodation during the period 9 November 2025 to 19 December 2025 (41 days). Staff occupation is a non-supply for VAT purposes and proprietor-family use is a non-business activity under the Lex specialis rule for closely-related parties applied by HMRC in VATSC03200. The three-room/41-day occupation reduces the assumed taxable accommodation supply by 123 room-nights.
3. The average daily rate (ADR) for the December and February trading periods was reduced by 18% from the prior-year ADR following the requirement to discount the seaward-wing rooms for the documented sea-noise and ongoing repair works. HMRC has applied the prior-year ADR to the assumed room-nights without taking the documented post-storm ADR reduction into account.
A full revised computation is enclosed, supported by the booking system extracts, the insurance correspondence and the management accounts. The revised output VAT for the quarter is £4,860 (less than the £6,720 declared, but the appellant is not seeking a credit at this stage — only that the assessment of £28,640 be vacated).
6.
RETAINED EU LAW — PRINCIPLE OF FISCAL NEUTRALITY
Where the appeal engages the United Kingdom's implementation of the principal VAT directive (Council Directive 2006/112/EC) and the body of CJEU jurisprudence that interpreted it before IP completion day on 31 December 2020, retained EU case law continues to apply by virtue of sections 6(3) and 7A of the European Union (Withdrawal) Act 2018 (as amended by the Retained EU Law (Revocation and Reform) Act 2023). The First-tier Tribunal and the Upper Tribunal are bound by retained EU case law; the Court of Appeal and the Supreme Court may depart from it where it appears right to do so.
The principle of fiscal neutrality requires that taxable persons who carry out the same transactions are not treated differently for VAT purposes (Marks and Spencer plc v HMRC C-309/06; Test Claimants in the Franked Investment Income Group Litigation v HMRC [2020] UKSC 47). The principle of proportionality limits the imposition of penalties to what is necessary to achieve the legitimate aim of the indirect tax regime. The principle of effectiveness requires that the procedural rules governing the recovery of overpaid VAT or the refusal of input tax recovery do not render the exercise of EU-derived rights practically impossible or excessively difficult.
Application to this appeal:
The application of the section 73 best-judgement power without taking into account documented and contemporaneous evidence of restricted trading is contrary to the principle of proportionality. The CJEU in Direkt-Kommer (C-664/12) and Marks andamp; Spencer (C-309/06) held that Member State implementation of the VAT directive must not impose burdens beyond what is necessary to secure the correct collection of VAT. The principle of fiscal neutrality requires that the appellant be treated in the same way as comparable hotel operators with documented closure or restricted-trading evidence. A best-judgement assessment that disregards documented evidence in favour of an annualised mark-up assumption fails the proportionality test as preserved under sections 6(3) and 7A of the European Union (Withdrawal) Act 2018 as amended.
The principle of fiscal neutrality requires that taxable persons who carry out the same transactions are not treated differently for VAT purposes (Marks and Spencer plc v HMRC C-309/06; Test Claimants in the Franked Investment Income Group Litigation v HMRC [2020] UKSC 47). The principle of proportionality limits the imposition of penalties to what is necessary to achieve the legitimate aim of the indirect tax regime. The principle of effectiveness requires that the procedural rules governing the recovery of overpaid VAT or the refusal of input tax recovery do not render the exercise of EU-derived rights practically impossible or excessively difficult.
Application to this appeal:
The application of the section 73 best-judgement power without taking into account documented and contemporaneous evidence of restricted trading is contrary to the principle of proportionality. The CJEU in Direkt-Kommer (C-664/12) and Marks andamp; Spencer (C-309/06) held that Member State implementation of the VAT directive must not impose burdens beyond what is necessary to secure the correct collection of VAT. The principle of fiscal neutrality requires that the appellant be treated in the same way as comparable hotel operators with documented closure or restricted-trading evidence. A best-judgement assessment that disregards documented evidence in favour of an annualised mark-up assumption fails the proportionality test as preserved under sections 6(3) and 7A of the European Union (Withdrawal) Act 2018 as amended.
7.
CONCLUSION AND DETERMINATION SOUGHT
The appellant respectfully requests that HMRC (a) reconsider the decision in light of the grounds set out above; (b) cancel the disputed amount of £28,640; (c) accept that payment or deposit would cause hardship under section 84(3) and admit the appeal without payment; and (d) acknowledge receipt of this appeal within 28 days. Where HMRC does not allow the appeal, the appellant reserves the right to lodge a Notice of Appeal under form T240 with the First-tier Tribunal (Tax Chamber) at PO Box 16972, Birmingham B16 6TZ within the further 30-day window from the date of the review conclusion (or the date of this letter, where no review is sought).
YOURS FAITHFULLY,
Hannah Jane Penwarden
Director — 22 May 2026
Date: ____________________
APPELLANT
Hannah Jane Penwarden
Director
Penwarden Coastal Hotels Ltd
Date: ____________________
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What Is a VAT Assessment Appeal?
A VAT assessment appeal is a written challenge to HMRC against an appealable VAT decision under section 83 of the Value Added Tax Act 1994. Section 83 sets out an exhaustive list of appealable matters — VAT chargeable on a supply, input tax recovery, registration and deregistration decisions, partial exemption methodology, classification disputes, default surcharges and (since 1 January 2023) the new points-based late submission and late payment penalty regime under Schedule 24 of the Finance Act 2021.
The appeal must be lodged with HMRC within 30 days of the date of the appealable decision. Section 83A obliges HMRC to offer a review at the same time as it issues the appealable decision — the taxpayer accepts the review (the review must conclude within 45 days unless extended by agreement), declines the review, or ignores the offer. Where review is sought, the 30-day appeal window resets from the date of the review conclusion letter under section 83F. Where no review is sought, the appeal goes direct to the First-tier Tribunal (Tax Chamber) by way of form T240.
Section 84(3) of the Value Added Tax Act 1994 requires the disputed VAT to be paid or deposited as the price of bringing the appeal — unless HMRC (or, on appeal, the Tribunal) is satisfied that doing so would cause the appellant to suffer hardship. Sections 84(3B) and 84(3C) carve out the hardship exemption, and the Tribunal's decision on hardship is final. The standard HMRC VAT correspondence address across the United Kingdom is BT VAT, HM Revenue and Customs, BX9 1WR.
What's Covered in This Template
Our United Kingdom VAT appeal template builds a structured letter HMRC can act on quickly — appellant identification, the appealable decision, the section 84(3) hardship application, the detailed grounds by decision type, the Perrin reasonable excuse analysis and the retained EU law argument where it applies.
Section 83 Five-Decision-Type Switch
Auto-selects the statutory framing for the type of HMRC VAT decision — assessment (section 73), default surcharge, registration refusal, compulsory deregistration or MTD points-based penalty.
HMRC VAT Postal Address (BX9 1WR)
Pre-fills the standard HMRC VAT correspondence address — BT VAT, HM Revenue and Customs, BX9 1WR, United Kingdom — used across the United Kingdom for VAT appeals and review responses.
Auto-Calculated 30-Day Appeal Deadline
Calculates the 30-day appeal deadline under section 83G from the date of the HMRC decision letter so the appellant can see at a glance whether the appeal is in time.
Appellant Type Switch — Company, Partnership, Sole Trader, LLP or Agent
Adjusts the appellant identification and the signature block to match the trading structure — company director, partner, sole trader proprietor, designated LLP member or 64-8 agent.
Expert: Section 84(3) Four-Stage Hardship Application
Structures the hardship application in four stages — route requested (pay / deposit / security / hardship relief); overall financial position; supporting evidence; determination sought — so HMRC and the Tribunal can decide hardship as a preliminary matter.
Expert: Detailed Grounds by Decision Type
Produces decision-type-aware detailed grounds — section 73 mark-up exercise rebuttal, default surcharge reasonable excuse, registration refusal threshold and time-of-supply analysis, compulsory deregistration ongoing taxable activity argument, MTD non-compliance reasonable excuse.
Expert: Perrin Reasonable Excuse Test (Default Surcharge / MTD Penalty)
Applies the Perrin v HMRC [2018] UKUT 156 (TCC) four-stage objective test to the default surcharge and the new MTD points-based penalty — facts asserted, objective assessment, date excuse ceased and remedy without unreasonable delay.
Expert: Brexit Retained EU Law Argument
Engages retained EU case law under sections 6(3) and 7A of the European Union (Withdrawal) Act 2018 — fiscal neutrality, proportionality and effectiveness as preserved post-IP completion day, drawing on Marks & Spencer C-309/06 and FII GLO [2020] UKSC 47.
MTD VAT Reform Awareness
Distinguishes the legacy default surcharge regime under Schedule 24 of the Value Added Tax Act 1994 (accounting periods before 1 January 2023) from the new points-based regime under Schedule 24 of the Finance Act 2021 (periods from 1 January 2023).
FTT Escalation Notice (Form T240)
Signposts the escalation route to the First-tier Tribunal (Tax Chamber) by way of form T240 to PO Box 16972, Birmingham B16 6TZ if HMRC declines the appeal or the review conclusion is adverse.
Single Signature Block — Director, Partner, Sole Trader or Agent
The letter is signed by the authorised signatory in the right capacity — director on behalf of the company, partner on behalf of the partnership, sole trader proprietor or 64-8 agent. No witness or notarisation is required for a VAT appeal.
How to Appeal a VAT Decision
Follow these steps to produce a well-structured VAT appeal letter in a format HMRC and (if escalated) the First-tier Tribunal (Tax Chamber) accept across the United Kingdom.
- 1
Check the 30-Day Deadline
Note the date printed on the HMRC decision letter. The appeal must reach HMRC within 30 days under section 83G of the Value Added Tax Act 1994. The template auto-calculates the deadline once you enter the decision date.
- 2
Identify the Decision Type — Five-Way Switch
Select the type of HMRC VAT decision — assessment, default surcharge, registration refusal, compulsory deregistration or MTD penalty. The template adjusts the statutory framing and the detailed grounds clause to match.
- 3
Decide on the Hardship Application
Section 84(3) requires the disputed VAT to be paid or deposited as the price of the appeal. If payment would cause hardship, apply for hardship relief — the template produces a four-stage application HMRC can act on. The Tribunal's decision on hardship is final under section 84(3C).
- 4
Address the Detailed Grounds
For an assessment, reconcile the HMRC mark-up exercise against documented contemporaneous evidence. For a default surcharge or MTD penalty, apply the Perrin four-stage reasonable excuse test. For a registration or deregistration decision, address the Schedule 1 threshold and the ongoing taxable activity position.
- 5
Engage Retained EU Law Where Relevant
For appeals engaging the United Kingdom's implementation of the principal VAT directive, retained EU case law under sections 6(3) and 7A of the European Union (Withdrawal) Act 2018 continues to bind the First-tier and Upper Tribunals — fiscal neutrality, proportionality and effectiveness are the most commonly engaged principles.
- 6
Accept or Decline the Section 83A Review Offer
HMRC will normally have offered a review at the same time as the appealable decision. Accept the review where the original decision was made by a relatively junior officer and a fresh independent reviewer may take a different view; decline the review where the case turns on a point of law that the FTT is best placed to decide.
- 7
Signpost the FTT Escalation Route
Where HMRC declines the appeal or the review conclusion is adverse, the appeal escalates to the First-tier Tribunal (Tax Chamber) by way of form T240, sent to PO Box 16972, Birmingham B16 6TZ within 30 days of the review conclusion letter.
- 8
Send to HMRC and Keep a Copy
Post to BT VAT, HM Revenue and Customs, BX9 1WR, United Kingdom — no street or city needed. Quote your VAT registration number on every letter. Keep proof of postage. HMRC aim to acknowledge within 14 days.
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Legal Considerations — VAT Assessment Appeal
VAT appeals are governed by United Kingdom indirect tax statutes and the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The framework operates the same in England, Wales, Scotland and Northern Ireland.
This template is for general information and does not constitute legal or tax advice. The Chartered Institute of Taxation (CIOT), Institute of Chartered Accountants in England and Wales (ICAEW) and Association of Chartered Certified Accountants (ACCA) regulate practitioners advising on complex VAT cases. The First-tier Tribunal (Tax Chamber) has the final word on the substantive VAT and hardship arguments.
Reviewed for the United Kingdom
Section 83 — Appealable Decisions
Section 83 of the Value Added Tax Act 1994 is the gateway to the VAT appeal. It lists the appealable matters exhaustively — VAT chargeable, input tax recovery, registration, deregistration, classification, partial exemption, default surcharge, and (since 1 January 2023) the new points-based late submission and late payment penalty regime under Schedule 24 of the Finance Act 2021. Matters outside section 83 are not appealable to the First-tier Tribunal.
Section 84(3) — Pay-or-Hardship Rule
Section 84(3) requires the disputed VAT to be paid or deposited as the price of the appeal. Sections 84(3B) and 84(3C) provide the hardship exemption — HMRC (or, on appeal, the Tribunal) must be satisfied that payment or deposit would cause the appellant to suffer hardship. The Tribunal's decision on hardship is final and cannot be reviewed under the Tribunals, Courts and Enforcement Act 2007. The hardship application is normally lodged with the notice of appeal and decided as a preliminary matter at the first directions hearing.
Section 83A — Indirect Tax Review Offer
Section 83A obliges HMRC to offer a review of an appealable indirect tax decision at the same time as it issues the decision. The taxpayer accepts (the review must conclude within 45 days unless extended), declines, or ignores the offer within 30 days. Where review is accepted and the conclusion is adverse, the 30-day appeal window resets from the date of the review conclusion letter under section 83F.
MTD VAT — New Points-Based Penalty Regime
Accounting periods beginning on or after 1 January 2023 attract the new points-based penalty regime under Schedule 24 of the Finance Act 2021. Late submission accrues points — 2 for annual returns, 4 for quarterly, 5 for monthly — and a £200 financial penalty applies on reaching the threshold. Late payment is dealt with separately. The legacy default surcharge under Schedule 24 of the Value Added Tax Act 1994 continues to apply to historic periods. The reasonable excuse defence (Perrin v HMRC [2018] UKUT 156 (TCC)) applies under both regimes.
Retained EU Law — Fiscal Neutrality and Proportionality
CJEU jurisprudence handed down before IP completion day (31 December 2020) is "retained EU case law" within sections 6(3) and 7A of the European Union (Withdrawal) Act 2018 as amended by the Retained EU Law (Revocation and Reform) Act 2023. It binds the First-tier and Upper Tribunals; the Court of Appeal and the Supreme Court can depart from it where it appears right to do so. Marks & Spencer C-309/06 (fiscal neutrality), Direkt-Kommer C-664/12 (proportionality) and FII GLO [2020] UKSC 47 (retained jurisprudence) are commonly engaged authorities.
FTT Escalation via Form T240
Where HMRC declines the appeal, the appellant lodges a Notice of Appeal under form T240 to the First-tier Tribunal (Tax Chamber) at PO Box 16972, Birmingham B16 6TZ, within 30 days of the original decision (or 30 days of the review conclusion letter where review was sought). The Tribunal decides the appeal de novo and can substitute its own findings of fact and law. The Tribunal applies the Martland three-stage test under rule 20 for late appeals.
Frequently Asked Questions
Build Your VAT Appeal Letter
Produce a clear, statute-cited letter HMRC can act on quickly. Whether the issue is a section 73 best-judgement assessment, a default surcharge, a registration or deregistration decision, or an MTD points-based penalty, the template builds the right statutory framing, structures the section 84(3) hardship application in four stages, applies the Perrin reasonable excuse test where it engages, and signposts the FTT escalation route via form T240 to PO Box 16972, Birmingham B16 6TZ.
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