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	First-tier Tribunal (Tax)
You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Seatechs Ltd v Revenue & Customs [2009] UKFTT 146 (TC) (24 June 2009) URL: http://www.bailii.org/uk/cases/UKFTT/TC/2009/TC00114.html Cite as: [2009] UKFTT 146 (TC)

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[2009[ UKFTT 146 (TC)

TC00114

Appeal Number: Man/08/1513

Man/09/0026

FIRST TIER TRIBUNAL TAX

VAT – DEFAULT SURCHARGE – Appellant assumed no return necessary because of its application to change accounting date – no reasonable excuse – second surcharge Appellant alleged that the return was dispatched in time – no reliable evidence of time and manner of posting – return incomplete – Appeal dismissed

DECISION NOTICE

Rule 35(2) The Tribunal Procedure (First Tier Tribunal) (Tax Chamber) Rules 2009

SEATECHS LIMITED Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE and CUSTOMS Respondents

Tribunal: MICHAEL TILDESLEY OBE (Chairman)

PETER WHITEHEAD (Member)

Sitting in public at Manchester on 22 May 2009

Appellant did not appear

Kim Tilling of the Solicitor's office of HM Revenue & Customs, for the Respondents

© CROWN COPYRIGHT 2009


 


DECISION

The Appeal

1. The Appellant was appealing again two surcharge assessments dated 6 October 2008 and 12 December 2008 in the sums of £20,735.91 and £34,962.37 respectively.
2. The disputed issue was whether the Appellant had a reasonable excuse for not submitting the July and October 2008 VAT returns and payments by the due date.
3. Mr Behan of Vantis Group Limited represented the Appellant. Mr Behan indicated that he was content for the Tribunal to hear the Appeal in the absence of the Appellant. Mr Behan provided detailed written submissions on behalf of the Appellant which were considered by the Tribunal.

Decision One: Surcharge Assessment dated 6 October 2008

4. HMRC received the Appellant's VAT return for the period ending 31 July 2008 on 1 October 2008. The Appellant paid the VAT owing by CHAPS on 30 September 2008. The due date for delivery of the return was 31 August 2008.
5. The Appellant's reason for late return and payment was that it had assumed a VAT return for period ending 31 July 2008 was no longer required because of its request for change of accounting date.
6. The Tribunal found the following facts:

(1) The Appellant was in the default surcharge regime since 31 October 2007.

(2) Default surcharges had been imposed on the Appellant for the two previous quarters.

(3) In mid July 2008 HMRC sent a VAT return for period ending 31 July 2008 by post to the Appellant.

(4) On 24 July 2008 the Appellant's representative requested a change of accounting date.

(5) On 4 August 2008 HMRC advised the Appellant that it could not deal with its request regarding change of accounting date because the Appellant had not provided authority in writing permitting the representative to act on the Appellant's behalf.

(6) The Appellant denied that it received the July VAT return and HMRC's letter of 4 August 2008. The Appellant explained that it operated from a suite of offices with approximately forty other companies which carried the risk that post addressed to the Appellant would be mislaid. The Tribunal found the Appellant's explanation unconvincing, which was not substantiated by evidence of actual problems with delivery of the post.

(7) The Appellant made no enquiries of HMRC about the progress of its application to change the accounting date.

(8) On 18 September 2008 the Appellant requested a duplicate VAT return following receipt of a surcharge assessment dated 12 September 2008. The Appellant submitted the return on 1 October 2008.

7. The Tribunal was not impressed with the Appellant's explanation for not submitting its VAT return and payment on time. The Appellant was subject to the default surcharge regime and knew that it faced a 10 per cent surcharge if it failed to meet the due date for the July VAT return. The Appellant's explanation that a return was not required because of its request for a change in accounting date demonstrated a lamentable disregard of its responsibilities in rendering VAT returns on time. The request was made close to the end of the July quarter. A prudent business person exercising due diligence with a proper regard for paying tax on time would at the very least have made enquiries of HMRC about the progress of the request and checked that a return was not required. The Appellant made no such enquiries of HMRC and assumed that no return was necessary for the July quarter, which in the Tribunal's view were not the actions of a prudent business person. Finally the Tribunal finds on balance that the Appellant did receive from HMRC a July VAT return and the letter dated 4 August 2008 which questioned the Appellant's veracity regarding its reasons for the late delivery of the return and payment. In view of the above reasons the Tribunal holds that the Appellant did not have a reasonable excuse for not submitting the July VAT return and payment by the due date.

Dispute Two: Surcharge Assessment dated 12 December 2008

8. HMRC received the Appellant's VAT return for the period ending 31 October 2008 on 1 December 2008, which was accompanied by an unsigned cheque for the VAT due. The due date for delivery was 30 November 2008.
9. The Appellant contended that it took all reasonable steps to ensure that the return and payment were delivered in the prescribed timescale. The Appellant stated that it posted the return together with the cheque on the 27 November 2008. The Appellant acknowledged that it failed to sign the cheque which extended the period of the default. The Appellant considered that the unsigned cheque should be viewed in the context of the bank returning the cheque, not the VAT Central Unit and that it had sufficient funds in its bank account to pay the VAT due.
10. The Appellant produced a copy of a post book entry to support its contention that it sent the VAT return on 27 November 2008. The evidence of the post book entry was contradicted by the date of the signature on the VAT return which was 28 November 2008. The Appellant supplied no certificate of posting and no evidence of the manner of posting. The fact of the unsigned cheque indicated that the Appellant was in a hurry to post the return which suggested that the date on the return was to be preferred to the date recorded in the post book entry.
11. The Tribunal finds that the Appellant has adduced no reliable evidence of the time and manner of when the return was despatched. Further the Appellant submitted an incomplete return by not signing the cheque. In those circumstances the Appellant has not demonstrated on the balance of probabilities that the return was despatched at such a time and in such a manner that it was reasonable to expect that the return would be received by HMRC within the appropriate time limit.
12. The circumstances surrounding the unsigned cheque were not relevant to the Appeal. The unsigned cheque was not the reason for the late delivery of the return. The Appellant put forward no grounds which might constitute a reasonable excuse for the default.
13. The Tribunal finds that the Appellant has no defence under either section 59(7)(a) and section 59(7)(b) of the VAT Act 1994.

Decision

14. In view of the reasons given above the Tribunal dismisses the Appellant's appeal against the surcharge assessments dated 6 October 2008 and 12 December 2008 in the sums of £20,735.91 and £34,962.37 respectively.

MICHAEL TILDESLEY OBE

TRIBUNAL JUDGE

RELEASE DATE: 24 June 2009

MAN/

Notes

15. A party may apply for full written findings and reasons, and must do so before making an application for permission to Appeal, provided the application is made in writing and received within 28 days after the date that the Tribunal released the decision notice.
16. A party wishing to Appeal this decision to the Upper Tribunal must seek permission by making an application in writing to the Tribunal within 56 days of being provided with full written reasons for the decision. An application for permission must identify the alleged error(s) in the decision and state the result the party making the application is seeking.