First-tier Tribunal (Tax)

[2011] UKFTT 421 (TC)

TC01274

Appeal number:  TC/11/00581

Value Added Tax – late payment of tax due (8 days) – default surcharge imposed – whether “reasonable excuse” – Section 71 VATA 1994 – Appeal dismissed.

FIRST-TIER TRIBUNAL

TAX

WILLIAM OSWALD Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS Respondents

TRIBUNAL JUDGE: Mr Kenneth Mure, QC

Sitting in public at Wellington House, 134-136 Wellington Street, Glasgow on 7 June 2011

Mr William Oswald, for the Appellant

Mrs Liz McIntyre, for the Respondents

© CROWN COPYRIGHT 2011

DECISION

1.       In this Appeal HMRC were represented by Mrs Liz McIntyre.  The taxpayer, Mr William Oswald, appeared on his own behalf.

2.       The Appeal is against a default surcharge of £676.18, being 10% of the taxpayer’s VAT liability for 09/10.

3.       Mrs McIntyre referred to the default schedule produced.  As indicated there, there had been three previous defaults in the periods 06/09, 12/09 and 06/10, but because of the small amounts involved and other reasons, no penalties had been imposed.  It is worth noting that on these occasions and for the Return to which this Appeal relates, the delays in payment were only of a few days.  However, Mrs McIntyre explained, there was no discretion in the calculation of penalties and the only issue, in her view, was whether the taxpayer had a “reasonable excuse” in terms of Section 71 VATA 1994 for the late payment (of 8 days) in respect of the 09/10 Return.

4.       Mr Oswald then explained the circumstances in which this delay had arisen.  He had started to file electronic Returns, and now pays by way of Direct Debit.  He claimed that he had been confused about the correct date for payment.  This had arisen from consideration of a form (production 5) entitled “Value Added Tax EC Sales List”.  This bore as a date for submission the 14^th day of the following month.  He had understood that this was also the date for timeous payment of VAT.

5.       Mr Oswald impressed me as a genuine, credible witness, earnest to satisfy the timescale prescribed by the Regulations.  He has now made arrangements to pay by Direct Debit which, if these Returns are made timeously, avoids the risk of late payment.

6.       Mr Oswald submitted that in the circumstances of his case there was a “reasonable excuse”.  However, the statute does not define this exhaustively:  it simply excludes certain situations.

7.       In the event, while there may have been genuine confusion in Mr Oswald’s mind about the correct date of payment – ie that it was the 14^th day of the following month – that in my view does not amount to a reasonable excuse (I note that in fact the late payment here was made on 15 November 2010, one day after the 14^th).

8.       Mr Oswald had received default notices before and was accordingly aware of the system of surcharges.  Ultimately it is the taxpayer’s responsibility to ensure that payments are made timeously.

9.       While I have a degree of sympathy for the Applicant, for these reasons set out supra this Appeal is refused.

10.    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.