20282
DEFAULT SURCHARGE — BACS payment confirmed by Bank as paid before the due date but not received by commissioners until after the due date because of a bank holiday —payment reasonable expected by appellant — section 59 8 (a) VAT 1994 — appeal allowed
MANCHESTER TRIBUNAL CENTRE
SAWLEY SECURITY LIMITED Appellant
- and -
THE COMMISSIONERS FOR
HER MAJESTY'S REVENUE AND CUSTOMS Respondents
Tribunal: David Porter LLB (Chairman)
Sitting in public in Birmingham on 2 August 2007
Simon Whittle appeared for the Appellant
Richard Mansell, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents
© CROWN COPYRIGHT 2007
DECISION
- Simon Whittle on behalf of Sawley Security Limited (the Appellant) appeals against a default surcharge for the period 28/02/07 in the sum of £2296.23. He submitted that he had paid the VAT for the Appellant by BACS on many occasions and he had always received confirmation from the bank that the payment had been processed the following day. He therefore had no reason to suppose that the payment had not been received by the Commissioners. The Commissioners submit that the payment was not received because of the Bank Holiday and the Appellant should have taken that into account.
- Richard Mansell is instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents and provided the Tribunal with a bundle of documents. Simon Whittle appeared on behalf of the Appellant.
The Facts
- Mr Whittle explained that he instructed the Appellant's bank to pay £115,196.10 by BACS to the Commissioners on the 4 April 2007. He produced to the tribunal the report received via his computer from the bank which confirmed that the payment had been processed on 5 April 2007. Mr Whittle said that he was unaware that a BACS payment usually took 3 days to process since his experience was that it was always paid the day following his request. Mr Mansell explained that the due date for the payment was 6 April 2007 which was a Friday and a Bank Holiday as was the following Monday 9 April. Consequently the payment had not been received by the Commissioners until 10 April 2007 and was therefore late. The Appellant should have realised that a BACS payment normally took three days to process, made an allowance for the bank holiday, and made the payment on 3 April.
The Law
- Section 59A of the Value Added Tax 1994 provides at sub-section (1):
"(1) For the purposes of this section a taxable person shall be regarded as in default in respect of any prescribed accounting period if the period is one in respect of which he is required…to make any payment on account of VAT and either:
(a) a payment which he is so required to make in respect of that period has not been received in full by the Commissioners by the date on which it became due;
(b) …"
And at subsection (8) (i) there is a defence:
"8(i) that the payment on account of VAT was dispatched at such a time and in such a manner that it was reasonable to expect that it would be received by the Commissioners by the day on which it became due …"
The Decision
- I am satisfied that Mr Whittle believed that the payment would be received by the Commissioners on the due date. This was not unreasonable in view of the fact that he received confirmation from the Bank that the payment had been processed within his anticipated time limit. Further the Bank Holiday did not commence until 6 April, the day following confirmation from his bank that the payment had been made. In these circumstances he would not necessarily have included the issue of the Bank Holiday when making the arrangement for the payment in question. I allow the appeal but make no order as to costs.
DAVID S PORTER
CHAIRMAN
Release Date: 6 August 2007
MAN/07/0548
