[2012] UKFTT 152 (TC)
TC01847
Appeal number
TC/2011/05293
Section
59(7)(b) VATA 1994 – VAT default surcharge – payment made electronically via
method involving 3-day processing delay – Appellant should have been aware of
this – appeal dismissed.
FIRST-TIER TRIBUNAL
TAX
CLAUGHTON
(OFFICE EQUIPMENT) LIMITED Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL: MICHAEL
S CONNELL (TRIBUNAL JUDGE)
ANN
CHRISTIAN (MEMBER)
Sitting in public at 4th
Floor City Exchange 11 Albion Street Leeds LS1 5ES on 07 October 2011
Ms Tracey Irwin, Finance
Manager of the Appellant Company, for the Appellant
Ms W Newham, Officer of HM Revenue
and Customs, for the Respondents
© CROWN COPYRIGHT
2012
DECISION
1. This
is an appeal by Claughton (Office Equipment) Limited (“the Appellant”) against
the default surcharge imposed by the Commissioners for Her Majesty’s Revenue
and Customs (“the Commissioners”) under the default surcharge regime in
relation to the late payment of VAT for the VAT period 03/11. The surcharge
was levied at the applicable rate of 5%, the Appellant having been in the
default surcharge notice regime at the date of the default.
2. The
Appellant disputes that it was late in its payment of VAT for the period in
question. The Appellant submits that payment was made on 06/05/11, that is
within the 7 calendar days allowed from the due date of 30/04/11 for payments
made electronically.
3. In
evidence, the Tribunal was provided with a copy of the exchange of
correspondence between the Appellant and the Commissioners as to the default
surcharge and the Appellant’s reasons why it considered the VAT payment had
been made on time; a schedule prepared by the Commissioners showing the
Appellant’s default surcharge ‘history’; a copy of the Appellant’s relevant
bank statements; a copy of the Appellant’s electronic VAT return submission and
the notice of assessment of surcharge given in respect of the period in
question.
4. Under
s59(1) Value Added Tax Act 1994 (VATA 1994) a taxable person is regarded as
being in default if he fails to make his VAT return for a VAT quarterly period
by the due date for that quarter, or if he makes his return by that due date
but does not pay by that due date the amount of VAT shown on the return as
payable in respect of that period. The Commissioners may serve a surcharge
liability notice on the defaulting taxable person, which brings him within the
default surcharge regime so that any subsequent defaults within a specified
period result in an assessment to default surcharges at the prescribed
percentage rate.
5. Section
59(7) VATA 1994 states that :
(7)
“if a person who, apart from this sub-section would be liable to a surcharge
under sub-section (4) above, satisfies the Commissioners or, on appeal, a
Tribunal that, in the case of a default which is material to the surcharge -
(a) the
return or, as the case may be, the VAT shown on the return was despatched at
such a time and in such a manner that it was reasonable to expect that it would
be received by the Commissioners within the appropriate time limit, or
(b)
there is a reasonable excuse for the … VAT not having been so despatched
he shall not be liable to the surcharge … “
It is clear from the provisions of s59(7) VATA 1994 that
the burden rests on the Appellant to show why its grounds of appeal fall within
the provisions of the sub-section and it is not liable to the surcharge.
6. The
Appellant’s bank statement shows that on 06/05/11 its account with HSBC was
debited under the bank’s ‘Bill Payment’ Scheme in respect of the VAT due on
30/04/11 in the sum of £16,134.53. The Appellant appears to have been under
the impression that the Bill Payment Scheme guaranteed a same-day payment and
that accordingly the monies would reach HMRC that same day. Although not
entirely clear from the evidence, the Bill Payment Scheme appears to be
operated under the bank’s BACS system which can take up to 3 days to clear a
payment, and the monies were received by HMRC on 10/05/11.
7. HSBC,
like many other banks, also operate other payment schemes such as ‘Telegraphic
Transfers’ which guarantee same-day payments, and a ‘Faster Payment Scheme’
although HMRC’s IT system does not accommodate this scheme. Payment was
therefore transmitted by BACS which resulted in the late payment to HMRC.
8. Ms
Irwin on behalf of the Appellant said the Appellant’s accounts department
thought that they had been operating under the Faster Payment Scheme for over a
year prior to the default and were unaware that HMRC’s systems could not accept
payments under that scheme. They were not aware that payments had been sent by
BACS. The Appellant says that, having discussed matters with HSBC, they were
told that payment had been taken from its account on 06/05/11 and that the bank
was not responsible for delays in processing once it had been remitted to
HMRC’s bank.
9. HMRC
says it also offers other payment methods, including direct debit, payment by
debit and credit card over the internet and direct credit via customers’ own
internet and telephone banking facilities. Payment can also be made by
telegraphic transfer on a same-day basis. HMRC also submit that the Appellant
had defaulted in respect of four previous periods and therefore would have been
aware from the guidance notes on the surcharge liability notices issued of the
potential financial consequences of future defaults within the surcharge
period. Details of the rising scale of surcharges were explained on the
reverse of each surcharge liability notice. HMRC also asserts that its record
show that the Appellant had been advised of HMRC’s non-participation in the
Faster Payment Scheme on two previous occasions (letters dated 23/06/10 and
15/07/10) and therefore it was reasonable to expect that the Appellant would
either remit monies by different means or allow sufficient time for payments to
be transferred from its account to HMRC.
10. Taking all the
circumstances into account, the Tribunal is not satisfied that the Appellant’s
grounds of appeal fall within the provisions of either s59(7) (a) or (b) and it
has not therefore shown a reasonable excuse for the VAT not having been sent
on time.
11. For the above
reasons the Tribunal dismisses the appeal.
12. The appeal
hearing, having taken place in the absence of the Appellant, the Appellant has
a right to apply for this decision to be set aside pursuant to Rule 38 of the
Tribunal’s Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The
Appellant has a right to apply for permission to appeal against this decision.
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.
MICHAEL S CONNELL
TRIBUNAL JUDGE
RELEASE DATE: 22 February 2012
