20605

Value Added Tax  -  Default Surcharge  -  Whether copies of instructions to the Appellant's bankers evidenced a reasonable excuse for late payment  -  Appeal dismissed

LONDON TRIBUNAL CENTRE

	ANGELA DIAKOPOULOU T/A MARKET LINK RESEARCH	           Appellant

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

				Tribunal:	HOWARD M NOWLAN (Chairman)
						JOHN G ROBINSON

Sitting in public in London on 13 February 2008

The Appellant did not appear and was not represented

Simon Chambers of HMRC’s Solicitor’s Office for the Respondents

© CROWN COPYRIGHT 2008

DECISION

1.    This was an appeal against the default surcharges imposed on the Appellant in respect of the VAT periods 09/03, 12/03 and 09/04. The Appellant had had many surcharges and all three of the contested ones were at the 15% rate.

2.    The default for the period 09/03 resulted from the fact that an initial cheque to pay the VAT for the period had been lost, and the VAT was not actually paid until payment was five months late. An undated letter from the Appellant, the receipt stamp on which we cannot read, simply asserted that the original cheque had been sent, with a comment that "I feel that I should be given the benefit of the doubt, but I offer this as a plea of mitigation".

3.    In order to demonstrate "reasonable excuse" it is for the trader to demonstrate that excuse, and this statement quoted above, coupled with the fact that the Appellant failed to present her case at the hearing and thus failed to amplify on the circumstances surrounding the missing cheque do not discharge the relevant burden of proof.   We thus dismiss the appeal in relation to the 09/03 default.

4.   The default for the period 12/03 resulted from fact that an e mail to the Appellant's bankers, sent one minute before midnight on Thursday 5 February 2004 failed to indicate that the payment should be made by a CHAPS transfer which would unquestionably have been made before the due date for electronic payments, namely on 6 February and thus before 7 February (the final date). Unfortunately the instruction to the bank not only failed to mention that the payment should be made by CHAPS transfer but also omitted to mention that it needed to have been received by the recipient on Friday 6 February.  The payment was accordingly made by BACS transfer and so was not received until 12 February.

5.   Although the late payment on this occasion resulted from a minor and unfortunate error on the part of the Appellant, it was the Appellant's error and not the bank's error.    The Appellant contended in writing that it was understandable that she might make such an error on making her first electronic payment, but we accept the point made on behalf of the Respondents that other earlier payments had in fact been paid electronically.  In view of the fact that the wrong instruction was thus given to the bank, we must dismiss the appeal for the default in respect of period 12/03.

6.    The third appeal, relating to the period 09/04, also resulted from the way in which the instruction to make payment was made to the same bank. On this occasion, whilst the instruction clearly said that the Appellant "would be grateful if the transfer was in the Bank of  England account this afternoon, so that charges will not be incurred for late payment", albeit without express reference being made to a CHAPS transfer, we note that the e mail was only sent at 3.09 p.m. on Friday 6 November. We accept the Respondents' argument that it was too late in the day to send a CHAPS instruction for payment to made on the same day, and we also note the argument that there was no evidence of a telephone call having been made to the individual to whom the e-mail was sent in order to emphasise the urgency of the payment being made immediately.    It thus remained perfectly possible that the e-mail would not be read or acted upon instantly, with no reasonable blame being apportioned to the bank. We thus also dismiss the appeal for this third period. 

7.    We accept that it is onerous for such large surcharges to be imposed at the 15% rate when payments (in the case of the second and third appeals) were only late by a small margin. However the legislation requires us only to address where there was a reasonable excuse for the late payment, and not to the severity of the penalty. It is also worth noting that an Appellant who was on her 14th default in the period 09/04 should by then have been paying extremely close attention to making payments on time, and not incurring excessive penalties through minor and easily avoided administrative slips. 

8.     Since the appeals were heard in the absence of the Appellant, the Appellant has 14 days from the release of this decision to apply to the Tribunal for a re-hearing of the case. Grounds should be given for why the Appellant failed to attend the hearing before us and as to why it is appropriate that there be a re-hearing, because it is up to the Tribunal to decide whether to accept any request for a re-hearing.

HOWARD M NOWLAN
CHAIRMAN

RELEASED: 6 March 2008

LON 2007/1681