This was an appeal against a penalty for carelessness of £3,846.19. The appellant accepted that the returns were inaccurate but provided a coherent explanation as to why that was the case.

The appellant made supplies of holiday lettings of mobile homes at a holiday park in Cornwall. 

It was the appellant’s evidence that their accountants had not undertaken the reconciliation exercise between the annual accounts and the VAT returns, and it was that which has resulted in the under-declaration of VAT.

This under-declaration arose as a result of a 20% retention by the appellant which was paid in part as commission to an agency who assisted in the letting of the holiday homes, and in part to Dennyview Investments Ltd, a company in the same VAT group as the appellant, for expenses incurred in relation to the lettings.