[2014] UKFTT 331 (TC)

                                                                                                                     TC03467 

Appeal number: TC/2012/03121

VALUE ADDED TAX — default surcharge — payments made a few days late — no reasonable excuse — appellant suffering financial difficulties in recession — unfairness of penalty — appeal dismissed

FIRST-TIER TRIBUNAL

tax chamber

                                                         EUROLET LLP                                        Appellant

- and -

                                      THE COMMISSIONERS FOR HER MAJESTY’S

                                                REVENUE & CUSTOMS                          Respondents

                             TRIBUNAL: JUDGE  COLIN BISHOPP

Sitting in public in London on 26 March 2014

Mr Mark Vincent, member, for the appellant

Mr Bruce Robinson, presenting officer, for the respondents

                                            © CROWN COPYRIGHT 2014

                                                             DECISION

1                In this appeal Eurolet LLP challenges the imposition on it of three default surcharges for the late payment of its VAT liability in periods 06/11, 09/11 and 12/11, in the total sum of £4,971.22. Eurolet had been in the default surcharge regime for some time, and of these surcharges the first was imposed at the rate of 10% and the others at 15%.

2               Mr Mark Vincent, who represented Eurolet before me, explained that the payments had been made late—in the first case by about three weeks, in the others by a few days—because, in the current difficult economic climate, Eurolet was struggling to continue trading, and the imposition on it of what he considered to be very unfair penalties for short delays in payment would have the effect of making it even harder for it to survive. He did not blame the delays on anything other than cash flow difficulties.

3               Mr Vincent is not alone in arguing that the default surcharge is an unfair burden on business, and I understand his sense of grievance. But Parliament has decided that a trader must pay the VAT he owes by a prescribed date, and that if he does not he is liable to a surcharge unless he has a reasonable excuse. The legislation also makes it clear that a shortage of funds is not a reasonable excuse. In Eurolet’s circumstances, therefore, the surcharges were correctly imposed and there is simply nothing this tribunal can do. I must accordingly dismiss the appeal, in respect of each of the surcharges.

4                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.

COLIN BISHOPP

CHAMBER PRESIDENT

RELEASE DATE: 1 April 2014