First-tier Tribunal (Tax)

[2014] UKFTT 486 (TC)

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TC03612

Appeal number: TC/2011/09936

VAT – Default surcharge – whether reasonable excuse – No – Section 71 VATA – Appeal dismissed

FIRST-TIER TRIBUNAL

TAX CHAMBER

Sitting in public at North Shields on Tuesday 14 May 2014

Appellant – not represented

Mr A Boal, Officer of HMRC, for the Respondents

© CROWN COPYRIGHT 2014

DECISION

1.             The appellant company was not represented in this appeal.  Its director Mr Hodgkins, had advised by email that he did not intend to appear.  Accordingly the hearing proceeded in his absence.

2.             The appeal relates to a VAT default surcharge of £86.12 for the period 07/11.  Payment of VAT was due on 7 September 2011.  It was not paid until 16 September 2011.  The Return was not received until 6 September 2011.  Accordingly payment was made nine days late.

3.             The BACS payment record included in the papers (item 3) indicates that payment of the VAT due was instructed on 6 September 2011 but payment was not to be made until the 16^th.  In the absence of any explanation the late payment would appear to have been a conscious decision.

4.             The appellant’s director was well aware of the default surcharge system.  According to the Schedule provided this was the fourth default, although no surcharge had been occasioned previously.  There had been defaults in respect of periods 10/10, 01/11 and 04/11.  On the second and third occasions a surcharge had not been imposed because the amount was below the £400 exemption margin.  On this fourth default a 10% surcharge of £86.12 had been imposed.

5.             It appears that the appellant’s business had suffered from adverse trading and economic conditions.  While we sympathise we have to consider the interpretation of reasonable excuse.  In terms of Section 71 VATA 1994 an insufficiency of funds is ordinarily not sufficient.

6.             For these reasons we dismiss the appeal.

7.             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.

KENNETH MURE QC

TRIBUNAL JUDGE

RELEASE DATE: 22 May 2014