[2011] UKFTT 788 (TC)
TC01622
Appeal number: TC/2011/07270
VAT
default surcharge – reasonable excuse – error by another – appeal dismissed
FIRST-TIER TRIBUNAL
TAX
RED
CONTRACTORS LIMITED Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL: J. BLEWITT (JUDGE)
Sitting in public at Leeds on 28 November 2011
Mr Adams and Mr Fitzpatrick for
the Appellant
Mrs Newham, of HM Revenue and
Customs, for the Respondents
© CROWN COPYRIGHT
2011
DECISION
1. The appellant appealed against an assessment to a default surcharge
for the period 03/11 in the sum
of £12,241.03, subsequently reduced by HMRC to £12,008.29.
2. The
Appellant had been in the surcharge regime since period 12/09. The due date for
payment had been 30 April 2011. The Return was submitted and received on 28
April 2011. The Appellant had instigated payment on the 7 May (a Saturday) but
payment did not reach the Commissioners’ account until 9 May 2011.
3. Mr
Adams confirmed that he understood that HMRC do not accept fast payments and
that the payment had not been made on time. It was submitted in support of the
appeal that the Appellant’s bookkeeper had been instructed to ensure that
payments were made on time however on this occasion payment had been attempted
on a Saturday but not received by HMRC until Monday.
4. Mr
Adams and Mr Fitzpatrick explained that HMRC had conducted a VAT inspection on
the Company due to an increase in turnover and that the visit had gone well. It
was accepted that mistakes do not constitute a reasonable excuse, but the
Tribunal was asked to take into account the fact that all monies owing to HMRC
both prior to and since this appeal have been paid. It was submitted that the
penalty was disproportionate.
5. Mrs
Newham on behalf of HMRC submitted that the grounds relied upon, namely
reliance on another, cannot amount to a reasonable excuse.
6. The
Tribunal was referred to a document dated 6 April 2011 in which HMRC reviewed
the Appellant’s default for the period 12/10. On that occasion, HMRC agreed to
withdraw the default. The reason given by the Appellant for late payment was
contained in a letter to HMRC dated 28 March 2011 which stated:
“We obviously know that the last date for payment s
the 7th day of the month following and did in all honest intention
make our final payment for that date...it was only after talking to a gentleman
from HMRC who advised me that you bank is not part of the fast pay group. I
apologise...for this oversight...after a most honest error.”
7. The
response contained within HMRC’s letter to the Appellant dated 6 April 2011
explained that:
“For future reference please note that when paying by
the BACS system...payments must reach the Customs account by the seventh
calendar day. However, if the seventh day falls on a weekend the payment must
be received by the Friday before...”
8. Mr
Adams clarified that he receives a significant amount of post daily and
apologised for the fact he had not read the contents of the letter from HMRC
fully.
9. The
Appellant’s Notice of Appeal dated 13 September 2011 cites the grounds relied
upon as follows:
“...the error was made by a bookkeeper who quite
clearly had the order to make payment on the 7th April only to
follow an onscreen message allowing the payment to be made the next working
day...this will not happen again.”
10. Case law has
made quite clear that reliance on another cannot amount to a reasonable excuse.
The responsibility rests with the taxpayer to ensure that its tax obligations
are met; the fact that the error was that of the bookkeeper and not Mr Adams or
Mr Fitzpatrick does not absolve the Appellant from its obligations.
11. Taxpayers are
advised by the Commissioners that it currently takes 3 bank working days for
payments to clear and taxpayers are advised that they should check with their
bank to see how long it will take for payments to be processed. Additionally,
in this case, when the Appellant defaulted in the period 12/10, the same reason
was given as to why payment was made late. Although the default was, on that
occasion, withdrawn the Appellant was clearly advised that payments must take
account of weekends and bank holidays. The payment was attempted on the due
date; a Saturday. The Appellant could not therefore have had any reasonable
expectation that the payment would be received on time.
12. The Tribunal
found as a fact that there was no reasonable excuse.
13. The Tribunal
found that the surcharge was not “plainly unfair” or disproportionate.
14. The appeal is
dismissed and penalty confirmed.
15. This document
contains full findings of fact and reasons for the decision. Any party
dissatisfied with this decision has a right to apply for permission to appeal
against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal)
(Tax Chamber) Rules 2009. The application must be received by this Tribunal
not later than 56 days after this decision is sent to that party. The parties
are referred to “Guidance to accompany a Decision from the First-tier Tribunal
(Tax Chamber)” which accompanies and forms part of this decision notice.
TRIBUNAL JUDGE
RELEASE DATE: 5 December 2011
