United Kingdom VAT & Duties Tribunals Decisions

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You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Regal Packaging Ltd v Revenue and Customs [2005] UKVAT V19308 (27 October 2005)
URL: http://www.bailii.org/uk/cases/UKVAT/2005/V19308.html
Cite as: [2005] UKVAT V19308

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Regal Packaging Ltd v Her Majesty's Revenue and Customs [2005] UKVAT V19308 (27 October 2005)

19308

VAT — PENALTIES — default surcharge — time-to-pay agreement — Appellant assuming that no surcharges would be applied — no reason to suppose that surcharge would not be applicable — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

REGAL PACKAGING LIMITED Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Michael Johnson (Chairman)

Susan Stott

Sitting in public in York on 20 October 2005

There was no appearance on behalf of the Appellant

Robert Toone, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2005

DECISION

1. The Appellant has appealed against a default surcharge for £7,291 imposed in respect of its VAT accounting period 10/04.
2. Nobody attended tribunal to represent the Appellant at the hearing of the appeal. However, having considered a bundle of documents relevant to the appeal ("the Tribunal Bundle") provided to us by Robert Toone, counsel representing Her Majesty's Revenue and Customs ("Customs"), we decided to proceed with the hearing, as we are entitled to do by rule 26(2) of the Value Added Tax Tribunals Rules 1986 (as amended).
3. The following matters appear from the Tribunal Bundle.
4. The Appellant has had a good payment record for VAT over the past 13 years. However a default surcharge of £3,500 was imposed in respect of its VAT accounting period of 04/04, and a default surcharge of £1,597 in respect of period 04/03.
5. The Appellant negotiated time-to-pay agreements with Customs in respect of those periods. Customs nevertheless applied the default surcharges mentioned, and so far as we can see, the Appellant accepted its liability to those surcharges without demur.
6. It therefore appears to be correct that, as Customs stated in a letter to the Appellant dated 9 August 2005, the Appellant appreciated that time-to-pay agreements attracted default surcharges attributable to the tax which had not been paid by the due dates.
7. The Appellant has appealed on the ground that it assumed that a default surcharge would not be imposed for the period 10/04. That period was the subject of a time-to-pay agreement for tax amounting to £72,910.37. None of that tax was paid by the due date of 30 November 2004. Customs agreed with the Appellant that the tax could be paid by three equal instalments on 8, 15 and 22 December 2004 respectively.
8. In a letter to Customs dated 14 January 2005, the company secretary of the Appellant wrote –

"When we asked for time to pay in November 2004, we assumed that a surcharge would not be applied, as we were paying the amount due within a short time scale of the date due on 30 November 2004, and none was mentioned.

"We did not receive from you any correspondence following our request for time to pay, and therefore we assumed that our request had been granted without further penalties."

9. Mr Toone submitted that there is nothing to show that Customs waived the default surcharge normally applicable in the case of late payments of tax. We agree.
10. Moreover the Appellant must have appreciated that default surcharges were applied in the case of late payments of tax covered by time-to-pay agreements, because that had been its previous experience with Customs.
11. We can identify no reason why the Appellant might have thought that a surcharge would not be applied in this instance. It is not explained in the letter of 14 January 2005, or elsewhere in the information before us, why the Appellant is said to have assumed that a surcharge would not be imposed, and we are very dubious as to how such an assumption could have come to be made.
12. For the above reasons we find that no reasonable excuse for the purpose of section 59(7) of the Value Added Tax Act 1994 has been made out. We dismiss the appeal.

MICHAEL S JOHNSON

CHAIRMAN
Release Date: 27 October 2005

MAN/05/0366