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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> John Mills Ltd v Revenue & Customs [2008] UKVAT V20526 (09 January 2008) URL: http://www.bailii.org/uk/cases/UKVAT/2008/V20526.html Cite as: [2008] UKVAT V20526

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20526

DEFAULT SURCHARGE – Reasonable excuse – Appellant subject to payment from account regime – National Advice Helpline told Appellant that it had an extra seven days to make on-line payments – Appellant had not disclosed to the Helpline that it was subject to the payments on accounts scheme – Appellant knew or should have known that it was not entitled to the seven day concession – No misdirection on the part of the Respondents – No reasonable excuse – Appeal dismissed

LONDON TRIBUNAL CENTRE

JOHN MILLS LIMITED Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: SIR STEPHEN OLIVER QC (Chairman)

RUTH WATTS DAVIES MHCIMA, FCIPD

Sitting in public in London on 19 December 2007

Isaac Obeng, accountant, for the Appellant

Simon Chambers for the Respondents

© CROWN COPYRIGHT 2007


 


DECISION

1. John Mills Ltd appeal against a default surcharge at 2% (in the amount of £6,032) relating to its 04/07 period.
2. John Mills Ltd has for some years been on the payments on account scheme. The balancing payment for the 04/07 period should have been received by 31 May 2007. For reasons that will appear, the payment was not received until 4 June 2007.
3. Each year John Mills Ltd has been sent a payments on account schedule by HMRC. This specifies the dates on which the payments on account and balancing payments are due for the following year. The payments on account schedule sent on 28 February 2006 required the balancing payment for the 04/07 period to be paid by 31 May 2007.
4. Sometime during the 04/07 period John Mills Ltd had made arrangements to file its return and make its payments on-line. Shortly before the end of the period, i.e. on 25 May 2007, Mr Isaac Obeng (who gave evidence) instructed a member of staff to contact the National Advice Service and asked the following question:

"Our VAT period is due by 31 May so I am going to pay with a payment slip with a bank giro. So if we pay by cheque at the bank today, would it be O.K.? Do you think the money will reach you?"

The reply received, having ascertained that John Mills Ltd was to pay by bank giro, was as follows:

"If you pay by bank giro you get a 7 calendar day extension, you get 7 extra … you get 7 extra days if you pay by bank giro for it to be received."

Mr Obeng, it appears, had not expected that the 7 day extension was available. He wondered whether a reason for the National Advice Line's advice was to encourage traders to file and pay on-line. He instructed his assistant to call the National Advice Centre again, on 29 May. Mr Obeng's assistant informed the person on the Helpline that they had just registered the on-line submission the previous Friday and he had sent a VAT return. He wished to make sure whether Customs had received it. This was confirmed through the helpline. Mr Obeng's assistant then asked whether it would be O.K. for him to pay by bank giro. The helpline confirmed this and Mr Obeng's assistant asked what would the position be if he paid it tomorrow. The answer that came back was:

"… you have got until the 7^th to make the payment. But we need to receive the payment by the 7^th of June."

5. As noted, John Mills Ltd dispatched the payment on-line on 4 June.
6. Customs say that there was no reasonable excuse for the late payment. Traders on the payment from account scheme are informed, in the "Terms and Conditions" of the scheme that are posted on-line, that the seventh calendar day extension does not apply in the case of returns made by businesses required to make payments on account. Our attention was drawn to the letters sent out each year with the payment on account schedule for that year. These letters say, under the heading "due dates for payments":

"Please note that the businesses in the payments on account scheme are not entitle to the seven day extension to due date for payments by credit transfer."

The most recent of those letters, covering the period to 31 May 2007, had been sent on 28 February 2006.

7. Customs say that it was incumbent upon John Mills Ltd to draw the attention of the National Advice Service person to the fact that it was on the payments on account system. This was all the more so having regard to Mr Obeng's uncertainty as to the position even following the first call of 25 May 2007.
8. Mr Obeng's response was that they had paid on 4 June because they thought that this was acceptable to the Customs; that is what they had been informed.
9. We do not think that John Mills Ltd has established a reasonable excuse. The rules relating to payment had been drawn to their attention on repeated occasions because of their status as members of the payment on account scheme. Mr Obeng may have had cause to question whether the seven calendar days extension applied following their arrangements to file and pay on-line. But John Mills Ltd should, we think, have drawn the fact that they were on the payment on account scheme to the attention of the person manning the helpline at the National Advice Service. John Mills Ltd should not have taken it for granted that the person on the helpline knew or should have known that they were on the payments on account scheme.
10. For those reasons we think that any reliance on the advice given by the National Advice Service confirming that John Mills Ltd had an extra days to make payments on-line did not amount to a reasonable excuse. We therefore dismiss the appeal.

SIR STEPHEN OLIVER

CHAIRMAN

RELEASED: 9 January 2008

LON 2007/1646