20173
VAT — PENALTIES — default surcharge — disruption to business by reason of the death of an individual heavily involved in the business — whether the death was the probable cause of the lateness of VAT return and late payment of tax — no — whether a reasonable excuse for lateness made out — no — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	DAVID, GARRY and JOANNE ELIZABETH WILKINSON
					trading as WINDMILL INN	Appellant

- and -

THE COMMISSIONERS FOR
				HER MAJESTY’S REVENUE AND CUSTOMS	Respondents

Tribunal: Michael Johnson

Sitting in York on 4 May 2007

There was no attendance by or on behalf of the Appellants

Bernard Haley, of the Solicitor’s office of H M Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2007

DECISION

1.	This is an appeal against a default surcharge for £1,518.31 imposed in respect of the Appellants’ VAT period 10/06.

2.	None of the Appellants attended the tribunal hearing.  They did not send anyone to represent them.  After waiting half an hour, and conscious that there was no explanation for the Appellants’ absence despite their having been informed of the hearing, I decided to proceed to hear the case.  I am empowered to do that under rule 26(2) of the Value Added Tax Tribunals Rules 1986 (as amended).  

3.	The grounds of the appeal appear from the letter accompanying the notice of appeal.  

4.	From that letter, it appears that the death in February 2006 of the late Mr Alan Wilkinson, who was formerly heavily involved in the business of the Appellants, had a significant effect on the day-to-day running and finances of the business.  It is said that the business suffered problems throughout 2006 and that it is only in 2007 that it has got back on its feet.

5.	The letter indicates, as confirmed by Bernard Haley representing H M Revenue and Customs (“Customs”), that in the circumstances of the late Mr Wilkinson’s death, Customs exercised their discretion not to impose a surcharge for late payment of the VAT due from the business in respect of its period 01/06.  

6.	However a surcharge was imposed in respect of the Appellants’ VAT period 04/06, when the tax and VAT return were despatched late.  No surcharge was attracted in respect of the Appellants’ VAT period 07/06.  In respect of period 10/06, with which the tribunal is concerned, the VAT return was a fortnight or so late and none of the tax due had been paid by the due date.

7.	It therefore appears that the lateness of the return and of the payment of the tax due in respect of period 10/06 are probably not directly connected with the death of the late Mr Wilkinson some ten months earlier.  

8.	For Customs, Mr Haley said that whilst Customs had sympathy for the loss of Mr Wilkinson, a sentiment shared by the tribunal, his submission was that the business had had long enough following the death to establish, in good time before November 2006, a fresh mechanism not dependent on the late Mr Wilkinson for despatching VAT returns and paying tax on time.   That being so, he submitted that the lateness in this instance could not be attributed to Mr Wilkinson’s death.

9.	I see the force in that submission and I accept it.  A death in the family is a shattering event.  However we must all somehow get up and carry on, as the business managed to do in this case.  The business has to fulfil its statutory duties, including paying its tax and making returns of the tax owing.  I think that a long enough time had passed following the death of Mr Wilkinson for the business to have no reasonable excuse based on his death for not having delivered its VAT return and paid its tax on time in respect of period 10/06.

10.	It is therefore my view that the surcharge must stand on this occasion.  I accordingly announced at the conclusion of the hearing that I had decided to dismiss the appeal.  This document sets out my reasons for so deciding.

MICHAEL JOHNSON
CHAIRMAN
Release Date: 22 May 2007
MAN/2007/0087