Hylton Roofing Ltd v Revenue & Customs [2006] UKVAT V19708 (14 August 2006)

 19708

VAT DEFAULT SURCHARGE: Appeal decision released 27 April 2006 adjourned determination of Appeal pending further representations – Error corrected the Respondents did not withdraw 21 April 2005 surcharge – instead the Respondents reduced  the surcharge penalties – surcharge liability notice extension dated 28 January 2005 operated as the surcharge liability notice– default surcharges issued on 21 April 2005 and 14 October 2005 complied with the requirements of section 59(4) VATA 1994 –  Respondents unable to find a replacement book-keeper did not amount to a reasonable excuse – Appellant did not submit representations as it went  into liquidation – no response from the receiver– Appeal dismissed. 

MANCHESTER TRIBUNAL CENTRE

HYLTON ROOFING LIMITED    	Appellant

- and -

HER MAJESTY’S REVENUE and CUSTOMS	Respondents

Tribunal:	MICHAEL TILDESLEY OBE (Chairman)
KATHLEEN RAM FCA	        (Member)

Appeal heard in public in North Shields on 22 February 2006, decision released on 27 April 2006 which adjourned final determination of Appeal pending further representations in writing. Period for written representations extended until 2 August 2006. No written representations received from the receiver.

© CROWN COPYRIGHT 2006

DECISION
The Appeal

1.	The Appellant was appealing against the imposition of two default surcharges. The first was issued on 21 April 2005 in the sum of £3,323.10 relating to the period 1 December 2004 to 28 February 2005. The second was issued on the 14 October 2005 in the sum of £5,869.32 relating to the period 1 June 2005 to 31 August 2005.
2.	The matters in dispute were:
(1)	The Appellant did not receive the surcharge liability notice issued on 16 July 2004, thus rendering invalid the surcharges imposed subsequently.
(2)	 The Appellant had a reasonable excuse for the period ending 31 August 2005 in that its book–keeper left at short notice which created a backlog of work.
3.	We heard the Appeal on 22 February 2006 and reserved our decision. 
4.	In the decision released 27 April 2006 we made the following findings of fact:
(1)	The Appellant did not receive the surcharge liability notice dated 16 July 2004.
(2)	The Appellant received the surcharge liability notice extensions dated 28 January 2005, 21 April 2005 and 14 October 2005 relating to periods ending November 2004, February 2005, and August 2005 respectively.
(3)	The departure of the book-keeper did not amount to a reasonable excuse for the Appellant not submitting on time its VAT return and payment for the period ending 31 August 2005.
5.	We did not reach a determination of the Appeal. Instead we directed that the Appeal be adjourned pending further representations from the parties on the legal effect of the non-receipt of the surcharge liability notice on the default surcharges subsequently issued. 
6.	The Respondents submitted their representations on 23 May 2006. The Tribunal  then discovered that the Appellant company had gone into liquidation, which necessitated a letter dated 2 June 2006 to the receiver asking about his intentions regarding the Appeal. The receiver has made no response within the period of two months from the date of the letter.
The Respondents’ Representations
7.	The Respondents pointed out that we made an error in the decision released on 27 April 2006. The Respondents had not withdrawn the default surcharge issued on 21 April 2005. The Respondents accepted at the hearing that the Appellant had not received the surcharge liability notice dated 16 July 2004 which had the following consequences:
(1)	The surcharge liability notice extension for period 11/04 became the surcharge liability notice which had the effect of removing the default surcharge in the sum of £702.98 issued on 28 January 2005.
(2)	The penalty for the default surcharge issued on 21 April 2005 became  chargeable at two per cent rather than five per cent which reduced the surcharge from £3,323.10 to £1,329.24.
(3)	The penalty for the default surcharge issued on 14 October 2005 became chargeable at five per cent rather than ten per cent which reduced the surcharge from £5,869.32 to £2,934.66.
8.	We acknowledge that we mistakenly recorded in the decision released on 27 April 2006 that the Respondents withdrew the default surcharge issued on 21 April 2005 in the sum of £3,323.10.
9.	We are satisfied that we have the power to rectify the error. We were not functus officio as we had adjourned determination of the Appeal. Further the record that the Respondents withdrew the default surcharge did not involve on our part a determination of the merits of the Appeal. We, therefore, expunge the reference to the Respondents withdrawing the default surcharge issued on 21 April 2005 and in its place record the following:
(1)	The removal of the default surcharge in the sum of £702.98 issued on 28 January 2005.
(2)	The penalty for the default surcharge issued on 21 April 2005 was reduced from £3,323.10 to £1,329.24.
(3)	The penalty for the default surcharge issued on 14 October 2005 was reduced from £5,869.32 to £2,934.66.
10.	The Respondents’ representations on the substantive issue regarding the legal effect of the non-receipt of the surcharge liability notice dated 16 July 2004 on the default surcharges subsequently issued were as follows:
(1)	The surcharge liability notice extension (SLNE) issued on 28 January 2005 contained the wording that
“If no surcharge period has been notified to you previously, the period beginning on the date of this Notice and ending on 30 November 2005 is hereby specified as a surcharge period for the purposes of section 59 or 59A of the VAT Act 1994”.
(2)	The effect of that wording in 28 January 2005 SLNE was that the SLNE became the surcharge liability notice (see The Tribunal decision in Goldfinch Transport Ltd v C & E Commissioners [1996] V&DR 484).
(3)	The 28 January 2005 SLNE was served on the Appellant.
(4)	The SLNE issued on 15 April 2005, which was served on the Appellant, extended the surcharge period until 28 February 2006.
(5)	The default surcharges of 21 April 2005 and 14 October 2005 were issued within the surcharge period imposed by the 28 January 2005 SLNE which was extended by the 15 April 2005 Notice.
(6)	The default surcharges of 21 April 2005 and 14 October 2005 satisfied the legal requirements of Section 59(4) VAT Act 1994. Thus the surcharges were lawful. 
11.	We agree with the Respondents’ factual and legal analysis of the default surcharges issued on 21 April 2005 and 14 October 2005.
Decision
12.	Having regard to the facts found in the decision released on 27 April 2006 and the findings recorded in this decision, we find that
(1)	The default surcharges of 21 April 2005 and 14 October 2005 satisfied the legal requirements of Section 59(4) VAT Act 1994.
(2)	The amended penalties for the default surcharges of 21 April 2005 and 14 October 2005 were £1,329.24 and £2,934.66 respectively.
(3)	The departure of the book-keeper did not amount to a reasonable excuse for the Appellant not submitting on time its VAT return and payment for the period ending 31 August 2005.
13.	We, therefore, dismiss the Appellant’s Appeal. 
14.	We make no order for costs.

MICHAEL TILDESLEY OBE

CHAIRMAN
RELEASE DATE: 14 August 2006

MAN/