United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2005] UKVAT V19137

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19137

Default surcharge: Unusual calls on Appellants resources: Changes of location of premises through no fault of Appellant: Settlement agreed between the parties.

EDINBURGH TRIBUNAL CENTRE

MARITIME SCAFFOLDING LTD Appellants

- and -

HM REVENUE & CUSTOMS Respondents

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

Sitting in Aberdeen Sheriff Court on Friday 17 June 2005

for the Appellants Mr John McDonald

for the Respondents Mr A McCue

© CROWN COPYRIGHT 2005.

DECISION

This is an appeal against the imposition of a default surcharge for the quarter 05/04 in respect of which the rate at which the default was applied was 10%.

Mr John McDonald, one of the directors appeared for the Appellants and gave evidence. He was credible.

Mr McCue appeared for HM Revenue & Customs. No witnesses gave verbal evidence.

The written evidence consisted of a schedule showing the default surcharge history.

The Appellants representative Mr McDonald gave evidence to the Tribunal that, prior to the imposition of this default his company had through no fault of their own and due to circumstances which I accepted were beyond their control been required to move three times in three years. These removals of equipment consisting of 350 tonnes of scaffolding, appropriate staff, office equipment, transport etc had brought unusually large removal expenses. This had caused the Appellants delay in payment of their VAT for the first time in the Appellants' history. The SLN was noted but due to the first and second moves some customers believed money problems lay behind the moves and failed to pay promptly. The Appellants pay their VAT on invoices only due to their volume of trading. This caused a second failure to pay on time. However the penalty fell below the de minimis amount and no sum was payable. On the third occasion that the Appellants missed a payment, it brought a penalty which was affordable. Therefore although the Appellants had good reason to appeal previously they had missed that opportunity as at 02/04.

As well as that they had required to obtain a loan from Mr McDonald's father and mother, previous owner/directors of the business. They had mortgaged their home, though retired, to help keep the business cash solvent as the Directors had reached the maximum overdraft their bank would allow. In March 2004, the Directors had reorganised the business making nine scaffolders redundant as the business was running at a deficit.

The Appellants also had bad debts which were properly recorded in their books but were not stored so as to allow for redress for bad debt on the VAT return.

The last reason for the final default was that a loan arranged through the Appellants' bank had a limited offer time of 90 days of which the Directors were unaware. When they called up the loan it was not made available until the Appellants were reassessed.

In light of the Appellants submissions which were fresh evidence to the Commissioners on some matters I adjourned to allow the Commissioners the opportunity to consider it.

On recommencing, I was advised that agreement had been reached between the parties on the basis that I admitted the immediately previous default to probation as an appeal which was accepted by the Commissioners. The subject matter of this appeal would therefore suffer a reduced penalty at 5% less the amount previously paid as a surcharge by the Appellants for the previous default.

I therefore allow the appeal to that extent only.

No expenses are found due to or by either party.

MRS G PRITCHARD, BL., MBA., WS

CHAIRMAN

RELEASE: 27 JUNE 2005

EDN/04/161

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