First-tier Tribunal (Tax)

[2011] UKFTT 339 (TC)

TC01199

Appeal number:  TC/2011/01487

VAT – default surcharge – electronic payment – failure to appreciate that BACS payments take three working days to clear – reasonable excuse – no  - appeal dismissed

FIRST-TIER TRIBUNAL

TAX

ADM GLASS LIMITED Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

TRIBUNAL: JUDGE ALEKSANDER (Chairman)

GARETH JONES MBE JP

Sitting in public at 45 Bedford Square, London WC1 on $

Roy Durrant of EPS Southern Ltd, Accountants for the Appellant

Steve Braeger, an officer of HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2011

DECISION

1.       This appeal relates to a default surcharge levied upon ADM Southern Limited, the appellant, for the late payment of VAT for the period 11/10.

2.       The appellant was represented by its accountant, Mr Roy Durrant, and HMRC were represented by Mr Steve Braeger.

3.       The facts are straightforward and are not in dispute.  The appellant has failed to file its VAT returns and pay its VAT liability by the due dates for some considerable period of time and had been within the default surcharge regime since 2008.

4.       In relation to the period 08/10, the Appellant submitted its VAT return by the due date, being 30 September 2010.  It paid the VAT due electronically via BACS.  This was the first time the Appellant had paid its VAT electronically, and qualified for the seven day extension time for payments to 7 October 2010.  However the BACS payment was not received by HMRC until 11 October 2010 and a default surcharge was levied accordingly.  On 25 October 2010, the Appellant wrote to HMRC asking for the surcharge to be reviewed.  HMRC replied to the Appellant on 13 December cancelling the surcharge.  The letter expressly noted that BACS payments take at least 3 days to clear, and that HMRC's banks do not participate in the "Faster Payments" clearing mechanism (which allows for same-day electronic clearing).

5.       The return for the period 11/10 was filed on 23 December 2010.  The VAT due was paid electronically via the Appellant's internet banking facility.  The payment was debited from the Appellant's account on 7 January 2011, but was not received by HMRC until 11 January 2011 (because of the intervening weekend). 

6.       As the payment was not received by the due date (as extended by seven days for electronic payments), HMRC levied a default surcharge at 15% of £2,366.87.  The Appellant submits that it has a reasonable excuse for the late payment because it did not appreciate that BACS payments take three working days to clear.

7.       Given that in their letter of 13 December 2010. HMRC had expressly warned the Appellant that electronic payments take at least three days to clear, we do not consider that it had a reasonable excuse in the circumstances of this case, and the appeal must be dismissed.

8.       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.