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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Castleton Moor Conservative Club v Revenue & Customs [2006] UKVAT V19875 (09 November 2006) URL: http://www.bailii.org/uk/cases/UKVAT/2006/V19875.html Cite as: [2006] UKVAT V19875

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19875

Default surcharge assessments - concession re insolvent traders considered - appeal dismissed

CASTLETON MOOR CONSERVATIVE CLUB

Appellant

and

THE COMMISSIONERS OF HER MAJESTY'S REVENUE

AND CUSTOMS Respondents

Tribunal: Elsie Gilliland (Chairman)

Sitting in public in Manchester on 2 October 2006

Colin Crossley, Accountant for the Appellant

Bernard Haley, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2006

DECISION

1. The appeal is against default surcharge assessments in respect of the 11 periods set out in the Schedule of Defaults in the bundle of documents produced to the tribunal namely 01.07.02 to 30.09.02, 01.10.02 to 31.12.02, 01.04.03 to 30.06.03,01.07.03 to 30.09.03, 01.01.04 to 31.03.04, 01.04.04 to 30.06.04, 01.07.04 to 30.09.04, 01.01.05 to 31.03.05, 01.04.05 to 30.06.05, 01.07.05 to 30.09.05 and 01.10.05 to 31.12.05 and in the total sum of £2177.94. For certain earlier periods Customs had accepted that there was a reasonable excuse on the part of the Appellant. These did not form part of the appeal. The Appellant's representative has confirmed that the appeal is not on quantum but as to whether the surcharge assessments should have been raised. He contends that insolvent businesses are not to have surcharges raised against them and that there is a Customs concession to that effect.

2. In correspondence (a letter dated 18 April 2006 addressed to Customs) and orally at the hearing before the tribunal it is submitted for the Appellant that the Appellant is insolvent and has been for some considerable time and is only able to continue trading with support from its bank and brewers. Traders accounts were produced with the correspondence which the Appellant's representative states clearly show that the Appellant was insolvent at the time of the surcharges.

2. The response from Customs in a letter dated 25 April 2006 and at the tribunal hearing from the representative appearing for Customs is that no evidence has been produced of formal insolvency. Further the tribunal is told that the concession relates to current and future defaults and not the situation on appeal. For the Appellant it is contended that the wording of the concession does not refer to a "formal" insolvency and that if that is required it should have said so.
3. The tribunal has inspected the accounts in the bundle of documents for the years ended 31 December 2002, 31 December 2003, 31 December 2004 and 31 December 2005. These were prepared by Crossleys Chartered Certified Accountants. The Appellant's representative is Colin Crossley. By way of example of the opinion of the accountants set out in the accounts the tribunal refers to that on page (2) of the 2005 accounts which states:

" In our opinion the financial statements give a true and fair view of the state of the clubs affairs as at 31^st December 2005, and of its deficit for the year then ended.

Assets shown in the Balance sheet reflect values consistent with the Club continuing to trade. The continuation of trading is dependent upon continued support from J.W.Lees & Co. (Brewers) Ltd. and Co-Op Bank".

The deficit carried forward from that year was £44101.

4. When asked by the tribunal if an insolvency practitioner had been approached in connection with the Appellant's affairs it was confirmed that this had been done but that no formal process had been entered into. However the accounts produced as referred to above do not indicate that the Appellant no longer had the support of its financiers.
5. The tribunal decides that:

(a) all Vat registered businesses are subject to the default surcharge regime. The several concessions which may be allowed by Customs do not have statutory force.

(b) the wording of the concession in respect of an insolvent trader is clear. It has not been shown that the Appellant is insolvent.

(c) the Appellant is a business trading with a deficit; the question as to whether it is trading whilst insolvent has been considered by it but the Appellant made the decision during the default periods to continue trading with support.

(d) in that sense the Appellant is in the same position as other businesses with trading difficulties cash flow problems and a history of late Vat returns and surcharges which continue to operate.

(e) whilst the Appellant has support properly to enable it to continue trading as is stated in its accounts it is not insolvent and the tribunal so finds.

6. The appeal is dismissed. There is no direction as to costs.

ELSIE GILLILAND

CHAIRMAN

Release Date: 9 November 2006

MAN/06/0348