CASTLE PLANT (DEESIDE) LTD v Revenue & Customs  [2006] UKVAT(Landfill) L00024 (24 November 2006) 

                                                                                            L0024
	
Jurisdiction – assessment – penalties – mitigation – reasonable excuse – whether alleged misdirection by HMRC could be considered by Tribunal as providing reasonable excuse – yes.  Penalty Appeal to be listed for hearing.

EDINBURGH TRIBUNAL CENTRE

CASTLE PLANT (DEESIDE) LTD         Appellant

- and -

THE COMMISSIONERS FOR
HER MAJESTY’S REVENUE & CUSTOMS	       Respondents

Tribunal:	 (Chairman):  T GORDON COUTTS, QC

Sitting in Aberdeen on 20 November 2006.

for the Appellant(s)		A C Howat, C.A.

for the Respondents		Andrew Scott, Shepherd & Wedderburn, WS

© CROWN COPYRIGHT 2006.

DECISION

The matter which, eventually, after some procedural vicissitudes, came before the Tribunal for consideration was whether the Tribunal had jurisdiction to deal with the appeal against a Civil Penalty imposed in the circumstances discussed below where an assessment had been issued to the Appellant in relation to underdeclaration of tax due as aggregate levy.   In the review letter issued by the Respondents it was said:
“I have reviewed the information related to the circumstances under which the  original assessment was issued and find that it is not reasonable for the interest and the penalties applied to the outstanding liabilities to be mitigated.
In your letter to Neil Davidson on 20 October 2005 you noted that “It appears that the company acted in good faith in continuing to prepare it’s returns on the same basis…”, the basis discussed with Ian Henderson on his assurance visit in October 2002.
I accept that the company acted in good faith and submitted returns that they considered to be accurate, however, this is not an acceptable reason for mitigation of penalties and interest as defined in the Finance Act 2001, Schedule 5,                paragraph 10(5)(c).
Accordingly I have decided that the interest and penalties imposed on the officer’s assessment and the outstanding liabilities for returns 07/05 and 10/05 should be upheld.”

	When the matter came before the Tribunal as a preliminary issue the argument was that the Tribunal did not have jurisdiction to consider a misdirection, by an officer of the Respondents  which, the Appellant said, was the cause of its underdeclaration.   The Respondents do not concede that there was a misdirection but also say that the Tribunal cannot deal with the appeal on the basis above noted.

	The Tribunal’s attention was drawn to Vetplus Limited v Commissioners for Revenue and Customs, dated 26 September 2006 in which case the Chairman held that the Tribunal had no jurisdiction to amend an assessment on the ground of misdirection.   In that Decision the cases of Animal Virus Institute v Commissioners of Customs and Excise (1998 VATTR 56 and Commissioners of Customs and Excise v Arnold (1996) STC 1271 were cited.   I have considered carefully these cases.  They do not bind and the circumstances were wholly different.

	In the first place the present appeal is not in relation to a VAT jurisdiction but in relation to aggregates levy imposed by the Finance Act 2001.   There it is provided that a Tribunal may mitigate or remove a penalty if satisfied that the Appellant had a reasonable excuse.   Reasonable excuse is not defined other than negatively and for present purposes the only relevant exclusion is of the matter of good faith Schedule 5 paragraph 10 (5)(c).

	Otherwise as I see it the Tribunal may consider any relevant circumstances with a view to considering whether there is a reasonable excuse for the underdeclaration having arisen.   A misdirection or erroneous advice given by the Respondents, acted upon by the Appellantif that is the case, is an obvious reasonable excuse.  No doubt the erroneous advice cannot remove the objective liability to tax but where the matter is one of penalty the considerations appear  to be entirely different.

	I hold that there is no reason to dismiss the appeal at this stage and direct that it proceed on the basis that the Appellant is entitled to establish that it was misled, reasonably, by a misdirection or perhaps even ambiguous instructions given by an officer of the Respondents.   The Tribunal is concerned in this matter with penalties and not liability to tax.

	Accordingly the application by the Respondents to dismiss the appeal is refused and it must proceed, if parties deem it economic or sensible in view of the sum involved, to a hearing.

T GORDON COUTTS, QC

CHAIRMAN

RELEASE:  24 NOVEMBER 2006.

EDN/06/8005