20803

VALUE ADDED TAX — default surcharge — key employee falling ill but 3 months before due date — true underlying reason for default lack of funds — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

JOHN STEPHENSON PROPERTY CONSULTANTS 
Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S REVENUE AND CUSTOMS	Respondents

			Tribunal:	Colin Bishopp (Chairman)
					Warren Snowdon
					
Sitting in public in North Shields on 15 September 2008

The Appellant did not appear and was not represented

Bernard Haley of the office of the Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2008

DECISION

1.	When this appeal was called on for hearing no-one was present to represent the Appellant. Notice of the hearing appeared to have been duly sent out to the Appellant’s address. Bernard Haley of their solicitor’s office, who represented the Commissioners, asked us to hear the appeal in the Appellant’s absence, in accordance with rule 26(2) of the Tribunal Rules, and in the circumstances we have described we agreed to do so.
2.	The Appellant carries on business as an estate agency and property consultancy from various offices in Northumberland. It sent in its VAT return for period 11/07 on about 7 February 2008 (though it arrived only on 12 February), about six weeks after the due date of 31 December 2007. It also sent with the return only part payment of the tax due. 
3.	The return was accompanied by a letter in which the Appellant explained that the person who dealt with its accounts had been off sick from the end of September to early January. The letter also explained that the Appellant was very much in arrear with its accounting records. No explanation was offered for the failure to pay all the tax due, but it is a reasonable inference from fact that the return was apparently precisely calculated and from the offer contained in the letter, that the Appellant would make further payments to bring its account up to date, that it lacked the funds necessary to make full payment.
4.	Unfortunately, the illness of an employee, no matter how important, almost four months before the due date cannot amount to a reasonable excuse for the late rendering of the return; the Appellant had ample opportunity to make other arrangements, and should have done so. Insufficiency of funds is precluded by statute (section 71(1)(a) of the Value Added Tax Act 1994) from amounting to a reasonable excuse. In these circumstances it is impossible for us to find a reasonable excuse for the default, and the appeal must be dismissed.

COLIN BISHOPP
CHAIRMAN
Release date: 18 September 2008

MAN/08/0399