[2012] UKFTT 114 (TC)
TC01810
Appeal number: TC/2011/06338
VAT –
Default surcharge – payment by BACS arriving late – no reasonable excuse –
Appeal dismissed.
FIRST-TIER TRIBUNAL
TAX
VALE
CONCRETE PRODUCTS LTD Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL:
LADY MITTING (TRIBUNAL JUDGE)
Sitting in public in Birmingham on 17 January 2012.
The Appellant was not
represented.
Mrs L Taylor, instructed by
the General Counsel and Solicitor to HM Revenue and Customs, for the
Respondents
© CROWN COPYRIGHT
2012
DECISION
1. The
Appellant was appealing against a default surcharge imposed by the
Commissioners for period 03/11 in the sum of £1956.76. The due date for
submission of return and payment was 30 April 2011 but as payment was being
made by BACS, the Appellant was given the usual seven day extension. The
Return was received on Wednesday 4 May 2011 but payment was not received until
Monday 9 May.
2. The
Appellant was not represented at the hearing and in a telephone call which the
Tribunal clerk made to Mr T C White of the company, Mr White advised that it
was not his intention to attend. The Tribunal therefore proceeded in the
absence of the Appellant.
3. The
Appellant entered the surcharge regime in period 03/09 when Return and payment
were both made late. For periods 06/09 and 09/09, no Returns were submitted
and centrally issued assessments were raised. The Appellant continued to default
in periods 12/09, 03/10, 06/10, and 09/10. In 06/10, the Appellant attempted,
for the first time, to pay by BACS. The company did
not manage to transmit the payment and instead sent in a cheque which arrived
late as the company was working to the extended deadline for BACS payments. The
Commissioners raised a surcharge but after representations from the Appellant
the surcharge was withdrawn by letter dated 16 November 2010 in view of the
fact that the Appellant was new to the system. The letter of the 16 November,
advised the Appellant very clearly that the date which counted was the date
upon which the Commissioners received payment not the date it was sent and also
clearly advised that if the seventh day falls on a weekend the payment must be
received by the previous Friday. The Appellant was advised to check with its
bank to see how long it would take for the transactions to be completed. As
this letter would not have reached the Appellant before the due date for the
09/10 Return, the Commissioners also withdrew that surcharge.
4. In
relation to the surcharge currently under appeal, the Appellant claimed to have
authorised the payment on Wednesday 4th May, but as its bank
statement shows the payment leaving the account on the 5th, it is
possible that the authorisation was given too late to be processed on the 4th.
The payment did not reach the Commissioners’ account until Monday 9th.
5. The
Appellant’s grounds of appeal read as follows:
“We feel that your reaction
is heavy handed and unhelpful especially in the current business climate.
We are a small young business
and as you are aware trading conditions are tough for all. In the past 12
months we have managed to increase our workforce from 7 to 12 employees, which
I am sure you will agree is a significant achievement given the difficult and
uncertain times we find ourselves in. To be penalised to the tune of nearly
£2,000 for in effect being one day late with a VAT payment is in our opinion
unreasonable. As the bank statement shows the payment left our account on 5
May. Should you impose this penalty it will seriously affect our cash flow and
put on hold our plans for any further investment in the short or medium term.
We are, in the words of David
Cameron, “all in this together” and would ask you bear this in mind and show a
little understanding and leniency when considering this appeal. Our latest VAT
payment left our account on 1st Aug and trust it was received by
HMRC well before due date.”
6. The
Appellant had full notice by the letter dated 16 November 2010 that payments by
BACS would take at least three working days and it also knew that when the
seventh day fell at the weekend, the payment had to be received by the previous
Friday. The date to which the Appellant should therefore have been working was
Friday 6 May. A payment which left its account on the 5th, or even
the 4th, would have no chance of reaching the Commissioners by the 6th.
As the Appellant had clearly been put on notice of the system and the process,
we find that it has no reasonable excuse for its default in this period. The
Tribunal is looking at the reasons for late payment, not the consequences of
the surcharge. It is not therefore relevant to the issue before the Tribunal
that payment will affect the company’s cash flow.
7. The
Appeal is therefore dismissed.
8. This
document contains full findings of fact and reasons for the decision. Any party
dissatisfied with this decision has a right to apply for permission to appeal
against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal)
(Tax Chamber) Rules 2009. The application must be received by this Tribunal
not later than 56 days after this decision is sent to that party. 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: 26 January 2012
