First-tier Tribunal (Tax)

[2014] UKFTT 284 (TC)

              TC03423                                                                    

Appeal number: TC/2013/09388

VAT – Late payment – Payment two days late – Director off sick –Previous defaults - Whether reasonable excuse - No – Appeal dismissed

FIRST-TIER TRIBUNAL

TAX CHAMBER

The Tribunal determined the appeal on 28 February 2014 without a hearing under the provisions of Rule 26 of the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 (default paper cases) having first read the Notice of Appeal dated 28 November  2013 (with enclosures),  HMRC’s Submissions (with enclosures) received on 28 January 2014 and the appellants’ reply dated 4 February 2014.

© CROWN COPYRIGHT 2014

DECISION

1 The appellants appeal against the decision of HMRC to impose a surcharge of £1671.80 for the period 07/13 under the provisions of Section 59 of the VAT Act 1994. The return for that period was filed electronically, in time, on 29 August 2013. Payment was due electronically on or before 7 September 2013. A part payment  reached HMRC’s bank account on 29 August and the balance of £16,817.09 on 9 September.

2. It is submitted in the Grounds of Appeal that the VAT was due on Saturday 7 September but the person responsible for dealing with this was on holiday the week leading up to that date  and dealt with it immediately on her return the following Monday. The Director who would otherwise have dealt with it on time was off sick. The payment was therefore two days late. In the reply to HMRC’s Statement of Case it is submitted that the penalty is very large especially in the current economic climate and it is requested that it be reduced or waived.

 3. The position of HMRC is that the appellants’ first default had been recorded for the period 07/12 and that their payments for 07/12, 10/12 and 01/13 were either partially or wholly late.  On 11 September 2012 the appellants had telephoned HMRC seeking Time to Pay which was refused because the request had been made after the due date and a Surcharge Liability Notice was issued. HMRC say that lack of funds does not constitute a reasonable excuse and whilst they are sympathetic, it was foreseeable that if the person responsible was on holiday someone else would have to deal with the VAT.  The VAT had been part paid and payment of the balance ought to have been prioritised. Having been advised of the default surcharge regime previously,  the appellants should have been aware of the consequences of not paying in time.  HMRC conclude that the appellants have not established that they have a reasonable excuse for the late payment.

4. I have given careful consideration to the evidence before me. A reasonable excuse is normally an unexpected or unusual event, either unforeseeable or beyond the person’s control, which prevents him from complying with an obligation when he otherwise would have done. The matter has to be considered in the light of the actions of a reasonable prudent taxpayer exercising foresight and due diligence and having proper regard for his responsibilities under the Taxes Act. I accept that the payment was only two days late but the fact of the matter is that the appellants were already in the Surcharge Regime and several payments had been late. They therefore ought to have been aware of the ramifications of another late payment.  In all the circumstances I must agree with HMRC that the appellants have not established a reasonable excuse for the late payment

5.  The appeal is dismissed.

6. 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.

NORMA BAIRD

TRIBUNAL JUDGE

                                          RELEASE DATE: 19 March 2014