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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Evergreen Clothing Ltd v Revenue & Customs [2007] UKVAT V20097 (05 April 2007) URL: http://www.bailii.org/uk/cases/UKVAT/2007/V20097.html Cite as: [2007] UKVAT V20097

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20097

Value added tax – penalties – default surcharge – decision on facts

LONDON TRIBUNAL CENTRE

EVERGREEN CLOTHING LTD

Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS

Respondents

Tribunal: Dr. David Williams (Chairman)

Mrs E Macleod CIPM (Member)

Sitting in public in London on 13 03 2007

Mr Alan Hughes, accountant, for the Appellant

Mrs Crinnion, Officer of Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2007


 


DECISION

1. The Appellant is appealing against a default surcharge imposed by the Respondents at the rate of five per cent of the amount of value added tax payable for the month of June 2006.
2. The Appellant was required to submit its value added tax return for the month of February 2006, together with the value added tax payable, on 31 March 2006. The return and tax were both submitted late. This happened also for May 2006, and a two per cent default was recorded and notified but not levied. The return and payment were again late for June 2006, and a surcharge of £772.74, correctly calculated as five per cent of the tax payable, was imposed.
3. The tribunal gave an oral decision dismissing the appeal by the Appellant against that surcharge. It now confirms that decision and the reasons given orally for making it. It emphasises that under the legislation it has no power to mitigate a default surcharge. Unless an appellant can show a reasonable excuse for a default, then the surcharge can be levied in full by the Respondents. The tribunal finds that the Appellant does not have a reasonable excuse for defaulting in June 2006 for the following reasons.
4. First, there is a history of previous defaults by the company. Officers and staff of the company should therefore have been aware of, and alert to, the default regime that applies for value added tax.
5. Second, the default that was the subject of appeal was the third default in five months. It was not an isolated occurrence.
6. Third, the default on each of those three occasions was a double default. Both the return and the payment of tax were late on each occasion.
7. Fourth, it is the responsibility of directors of a company to ensure that they take the necessary steps, or instruct and empower others to take the necessary steps, to ensure compliance with the value added tax returns and payments systems. The tribunal heard the evidence about illness of the director of the Appellant at the relevant times. However, it agrees with Mrs Crinnion that the evidence did not directly show why the director was incapable of acting personally or of making appropriate arrangements for others to act so as to ensure the June 2006 return and payment were submitted on time. The inability of the accountant or of anyone else to make payments if she did not do so was a matter over which she had personal control and for which she had personal responsibility.
8. While the tribunal accepts that the director has now put in place arrangements to ensure no further default since the default in June 2006, and that no further defaults had occurred, it does not consider that this is relevant to the imposition of the default surcharge for that month.

DAVID WILLIAMS

CHAIRMAN

RELEASED: 5 April 2007

LON/2006/1282