[2010] UKFTT 361 (TC)

TC00643
					Appeal number:   TC/2010/02912                       
	
VAT- failure to pay VAT on time – time to pay agreement did not effect liability for later delays – further time to pay agreement not within section 108 Finance Act 2009 as not entered into before default arose – appellant still owing in excess of £21,000 – no reasonable excuse for failure – appeal dismissed

FIRST-TIER TRIBUNAL

TAX 
		
		                          FISHER HOMES & VISION LTD			Appellant

-and-

THE COMMISSIONERS FOR HER MAJESTY’S
		                            REVENUE AND CUSTOMS		         Respondents

Tribunal:   David Steele Porter (Judge)
			     John Nisbet (Member)

Sitting in public in Leeds on 23 June 2010

	         No one appearing for the Appellant

Mrs Nadine Newham instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2010

DECISION

Mr Christopher Fisher, a director of the Appellant, was unable to attend the hearing due to his Mother’s funeral and by a letter, received by the Tribunal Service on 17 June 2010, from Mr Fisher on behalf of the Appellant he confirmed that the matter could be heard in his absence. 
 
The Appeal is dismissed.

The Tribunal found that the Appellant did not have a reasonable excuse for the failure to pay its VAT for the period 10/09
         
Preliminary issue

The Appellant had been advised in a letter from the Tribunal Service, dated 12 April 2010, that its application to appeal was out of time. As the Respondents agreed that they had no objection to the appeal being heard, the Tribunal agreed to hear the appeal although the application had been made out of time.

The Facts

1.	On 31 August 2008 the Appellant entered into a time to pay agreement with the Respondents and agreed to pay £5,328.49 over 5 months its VAT arrears of £26,205.90 that arose from the period 07/08. Even though the Appellant had entered into a time to pay agreement the Appellant still remained liable to a surcharge in the event that subsequent VAT payments were a late payment. The payments under that agreement were due to have finished by the end of January 2009, but the January payment was still outstanding and was paid in the following month. On 3 July 2009 the Appellant made a further request for a time to pay agreement with the Respondents in respect of further arrears that had accumulate over the previous periods 10/08, 01/09 and 04/09 which amounted to £25,184.  The request was made on 31/05/09 after the 04/09 payment was due to be paid.  As a result the Appellant cannot take advantage of the relief provided by section 108 of the Finance Act 2009. That relief was introduced to allow businesses, which had been affected by the recession, to enter into a time to pay agreement with the Respondents. The effect of section 108 agreement is that no further default surcharge liabilities arise during the existence of the agreement. However, the request has to be made before the payment becomes due, which was not the case. As a result, the Appellant’s default surcharge regime continues. Even with the new time to pay agreement, Mr Fisher was aware that the Appellant were still in arrears with its VAT liability and Mr Fisher volunteered to pay a further £1000 each week starting in July 2009. Those payments continued until October 2009. The Appellant now appeal against the default surcharge penalty for the period 10/09. Mr Fisher explained in his Notice of Appeal that he was restructuring and reducing the size of his business and we were told by Mrs Newham that the Appellant had purchased another premises. As a result of that purchase Mr Fisher believed that the Appellant would receive a VAT credit, but he was unsure of the exact amount and he asked the Respondents to advise. The Respondents had taken some time to respond but we were told by Mrs Newham that the VAT credit amounted to £11,812.77 and had been off set against the Appellant earlier VAT liabilities. The Appellant’s liability for the period 10/09 was £17,728.86 so that even if the £11,812.77 credit had been available the Appellant would still have had VAT arrears of £5,916.09. In those circumstances we find that the Appellant did not have a reasonable excuse for its failure to pay the VAT for the period 10/09 and the appeal is dismissed. We also note that in spite of the two ‘time to pay agreements’ the Appellant still appear to have VAT arrears in excess of £21,000 so that minimum progress (if any) has been made to reduce the Appellant’ arrears.

2.	Since the hearing took place in the absence of the Appellant, it has the right to apply for this decision to be set aside pursuant to Rule 38 of The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (“the Rules”).  The Appellant has a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Rules.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

			
TRIBUNAL JUDGE
RELEASE DATE: 4 August 2010