20892

VAT – DEFAULT SURCHARGE – Appellant claiming that the departure of its former finance director and his failures while in post amounted to a reasonable excuse for the purposes of s. 59(7)(b)VAT Act 1994 – Tribunal precluded from accepting that as a reasonable excuse by s. 71(1)(b) VAT Act 1994 – Surcharge for one period found to be overstated and a reduction directed – Otherwise, appeal dismissed 

LONDON TRIBUNAL CENTRE

	MAX SECURITY LIMITED	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S 
	REVENUE AND CUSTOMS	Respondents

			Tribunal:	JOHN WALTERS QC (Chairman)
					J G ROBINSON

Sitting in public in London on 3 December 2008

The Appellant was not present and was not represented

Gloria Orimoloye, Advocate, for the Respondents

© CROWN COPYRIGHT 2008

DECISION

1.	This was an appeal against liability to default surcharges under section 59 VAT Act 1994 (“VATA”) brought by Max Security Limited (“the Appellant”).  The Appellant was neither present nor represented when the appeal was called on for hearing and the Tribunal decided to proceed to consider the appeal in the absence of the Appellant pursuant to rule 26(2) of the VAT Tribunals Rules 1986.
2.	The default surcharges in issue were for the periods 07/07 and 10/07 and were of the amounts of £586.85 (calculated at 5% of the VAT due) and £1,166.90 (calculated at 10% of the VAT due) respectively.
3.	It appeared from the papers before the Tribunal that the VAT due for both periods was received late by the Commissioners, and that the only reason advanced by the Appellant to support his appeal was that the default was due to the departure of the former finance director from the Appellant company and his failures while in post, and that this constituted a reasonable excuse for the default in the terms of section 59(7)(b) VATA.
4.	As Ms. Orimoloye submitted, however, for the purposes of section 59 VATA it is expressly provided by section 71(1)(b) VATA that “where reliance is placed on any other person to perform any task, neither the fact of that reliance nor any dilatoriness or inaccuracy on the part of the person relied upon is a reasonable excuse”.
5.	The Tribunal therefore decided that neither the Appellant’s reliance on the former director to attend properly and promptly to its VAT returns nor any dilatoriness or inaccuracy on the part of the former director in that regard can constitute a reasonable excuse.
6.	The Tribunal noted that the surcharge for the period 10/07 ought to have been recalculated by reference to the VAT declared in the return for that period, which was £9,741.30.  10 per cent. of that amount is £974.13, and the surcharge should be reduced from £1,166.90 to £974.13 accordingly.  Ms. Orimoloye accepted that this was correct.
7.	Therefore, except to the extent that the surcharge for the period 10/07 falls to be reduced as per the preceding paragraph, the Tribunal dismissed the appeal. 

JOHN WALTERS QC

CHAIRMAN
RELEASE DATE: 11 December 2008

LON/2008/0935