19173
	VAT — PENALTIES — default surcharge — late refund of amounts of tax by Customs in previous quarters not a reasonable excuse for late submission of VAT return and late payment of tax in current VAT quarter — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	
	UP & RUNNING (HARROGATE) LIMITED	Appellant

	- and -

	HER MAJESTY’S REVENUE AND CUSTOMS	Respondents

				Tribunal:	Michael Johnson (Chairman)

Sitting in public in York on 14 July 2005

There was no representation on behalf of the Appellant 

Chris Owen of the Acting Solicitor for HM Revenue and Customs for the Respondents 

	© CROWN COPYRIGHT 2005

DECISION

1.	This is an appeal against a default surcharge for £423.55 imposed in respect of the Appellant’s VAT accounting period 30/04.  The surcharge was imposed because the Appellant’s VAT return for that quarter was not received until 16 June 2004, ie 16 days after the due date of 31 May 2004, and because none of the tax shown as due on the return was paid by the due date.

2.	The appeal is brought pursuant to section 59(7) of the Value Added Tax Act 1994.  Under that sub-section, the Appellant is not liable to the surcharge in dispute if the Appellant satisfies the tribunal that there is a reasonable excuse for the return or VAT not having been despatched so as to be received within the appropriate time limit.

3.	There was no attendance on behalf of the Appellant at the hearing of the appeal.  Being satisfied from looking at the tribunal file that the Appellant had been informed of the date, time and place of the hearing, and there being nothing to indicate that the Appellant did not wish the appeal to go ahead as notified, I elected to proceed with the hearing pursuant to rule 26(2) of the Value Added Tax Tribunals Rules 1986 (as amended).

4.	The Respondents, Her Majesty’s Revenue and Customs, were represented by Chris Owen, of the Acting Solicitor’s office.

5.	The Appellant’s alleged excuse for the default is contained in a letter written to H M Customs and Excise, as they were then known (“Customs”), on 12 January 2005.  

6.	That letter describes how the business of the Appellant changed from that of a partnership to that of a limited company in 2003.  At that time, the business applied for a refund of tax.  According to the letter, the refund was “particularly late” in being made.

7.	The letter explains how Customs checked that the refund was due and accepted that it was.  It also describes how, the following quarter, a further refund of tax fell due.  This too, the letter alleges, was late in being made.

8.	The letter concludes by saying that the only “fair” result would be for the Appellant’s lateness in relation to the default with which the tribunal is now concerned to be balanced against the lateness of Customs in making the refunds mentioned, so that “we are at a one-all draw on this one”, as the letter put it.

9.	I can see the sense in this, on the basis that what is sauce for the goose is sauce for the gander.  However two wrongs do not make a right.  For the tribunal to be able to allow the appeal, there needs to be an excuse for the lateness of the return and late payment of the tax on this particular occasion, ie in May/ June 2004.  

10.	The missing piece of evidence is as to how the late refunds of tax mentioned in the Appellant’s letter might have impacted, if at all, on the late payment and late VAT return on this occasion.  It does not seem to be pretended that they did.  The upshot is that it does not appear that the Appellant has advanced a potential excuse that might be regarded by the tribunal as reasonable, with regard to the default with which I am concerned.

11.	For this reason I am compelled to dismiss the appeal.  I announced at the conclusion of the hearing that that was what I was doing, and that I would be producing in due course a written decision setting out the basis of that ruling.  This is that decision.

12.	No application was made by Mr Owen for costs, and none are awarded.

MICHAEL JOHNSON
CHAIRMAN
Release Date:  20 July 2005

MAN/05/0148