United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2004] UKVAT V18748

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Dewar Associates Ltd v Customs and Excise [2004] UKVAT V18748 (03 September 2004)

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18748

EDINBURGH TRIBUNAL CENTRE

DEWAR ASSOCIATES LTD Appellants

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: (Chairman): Mrs G Pritchard, BL., MBA., WS

Sitting in Edinburgh on Thursday 19 August 2004

for the Appellants HEARD ON PAPERS ONLY

for the Respondents Mr A McCue

© CROWN COPYRIGHT 2004.


 


DECISION

This is an appeal against an imposition of a Default Surcharge in respect of the quarter 08/03. It is at the rate of 10% in the sum of £1352.75. The Appellant did not appear and the Tribunal proceeded in his absence on the current papers.

Mr McCue appeared on behalf of the Commissioners. The written evidence consisted of a bundle of papers numbered 1-48. Where reference is made to any page it will be treated as repeated here.

The circumstances are that Mr Dewar of Dewar Associates Ltd runs an engineering business and had entered the Default Surcharge regime following the failure of his payment for the 08/02 quarter to be received timeously. It was due on 30/09/02 and so far as I can understand from the evidence was made by BACS payment through his bank and was apparently late although I have no record of the date on which it was received by the Commissioners.

Again for the 02/03 quarter the due date of payment was 31/03/03 which again was received late and an imposition of a 2% surcharge brought out a sum which was not recovered under the de minimis principle.

Again on the quarter 05/03 due on 30/06/03 payment was late and again because of the de minimis rule no charge was made.

It was not until the 08/03 quarter that Mr Dewar became aware of the real difficulty he was in since this led to the imposition of a surcharge of £1,352.75 being 10% of the Value Added Tax due that quarter.

It is not in dispute that his bank took 5 days to make the payment.

The Appellant was much distressed by this change. He wrote a number of letters of complaint generally to his MP and various others but in response to a complaint made directly to the Commissioners he received a letter from them (page 40 of the bundle) which dealt with the letters which Mr Dewar had written to Mr Nigel Griffiths MP and to Mrs Jan Russell of the Default Surcharge Appeals Section. The Commissioner's officer said that she was sorry that Mr Dewar considered he had been treated unfairly by Customs on the this occasion and commented "unfortunately bank transfers do take 2 to 3 days and this does cause problems for many traders". She then goes on to advise that he can appeal to a Value Added Tax Tribunal.

It is an assumption which many people make that the bank will take a maximum of 3 days and possibly at the outside 4 days to transfer funds once the instruction has been given.

It is a view which even the Commissioners held. I therefore am allowing the appeal based on the trader having a reasonable understanding of what would happen when he instructed his bank transfer. A BACS payment cannot be made by the bank unless there are sufficient funds available. Payment is therefore very certain for the Commissioners when the funds are transferred electronically. There is a great advantage in that. It can hardly be held to be the trader's responsibility if the bank happens to take an extra day or two leading to the unfortunate outcome that he is treated as being in default. Either the Commissioners should take this on board and not publish information such as contained in their own correspondence and literature suggesting that traders have "extra days" before payment is required or should allow for the vagaries of bank practice. Otherwise it can be confusing and distressing for traders who find themselves in Mr Dewar's position.

The appeal is therefore allowed. No expenses are due to or by either party.

MRS G PRITCHARD, BL., MBA., WS

CHAIRMAN

Release Date : 3 September 2004

EDN/04/35