The victory of a newspaper group in a legal action against HMRC in relation to a large VAT penalty shows the importance of the proportionality principle of EU law. The large fine related to a late VAT return and the judgment illustrates that excessive punishments should not be imposed. The default surcharge in the UK is based on a percentage of the late VAT, which begins at 2 percent and increases with subsequent defaults. In 2008 the Trinity group was one day late in filing a VAT return and had to pay a default surcharge of GBP 70,900. The First Tier Tribunal in the UK rejected this because the fine was too severe. In the opinion of the Tribunal the fine should be proportionate to the nature of the offence. As the Tribunal could not reduce the fine it had to cancel it, and suggested that this system should be redesigned.
