United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2006] UKVAT V19655

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Mackenzie Hall Ltd v Revenue & Customs [2006] UKVAT V19655 (17 July 2006)

19655

Default Surcharge: One-off clerical error of dating cheque wrongly. Cheque returned by bank. Long history of defaults. General lack of adherence to rules of payment. Appeal refused.

EDINBURGH TRIBUNAL CENTRE

MACKENZIE HALL LIMITED Appellants

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE & CUSTOMS Respondents

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

Sitting in Edinburgh on Wednesday 12 July 2006

for the Appellants Mr Colin Dempster

for the Respondents Mr Russell Harrison

© CROWN COPYRIGHT 2006.

DECISION

This is an appeal against a default surcharge imposed in respect of period 12/05 payable 31/1/06 extended to 7/2/06 by electronic credit payment arrangements. The VAT due was £107,324. The default surcharge which was applied only to a portion of that was £2866.22. McKenzie Hall Ltd (The Appellants) are debt management consultants and were represented by Mr Colin Dempster, CA their accountant. HMRC were represented by Mr Russell Harrison. The written evidence consisted of two bundles, those of the Appellants numbered A1-A15, and those of HMRC numbered 1-110. Where reference is made to any page it should be treated as repeated here.

Findings

Mr Dempster submitted and I find that his clients had made great efforts to comply with the credit transfer arrangements so as not to incur a penalty. They had made prompt arrangements for payment of the VAT due in respect of the period 12/05 due 7/02 by instructing their bank to make payment in three tranches as can be seen in the bank statement Pp 63, 64 & 65. The first debit is on 03/02, of £50,000 the second is on 06/02 of £50,000 and again on 06/02 of £7,324.00 being the whole balance due. He was satisfied that he had advised his clients on 02/02 to make appropriate arrangements for payment of the debt by 07/02. They had confirmed to him they had done so. He further explained his clients had a restriction on the amount of any single payment instructed to be made, which led to the splitting of the sums but could offer no reason why there had been any delay between 03/02 and 06/02 in carrying out the transfer. He was aware the bank could take time to implement the instruction.

Mr Harrison submitted on behalf of HMRC and I find that the facts were plain. The funds required to be credited to the Bank of England on or before 07/02. On the occasion of a previously occurred default surcharge being withdrawn the Appellants had had it spelled out to them that the instruction to the bank had to be made three days at least before the money was due in HMRC's account. There was no direct evidence in the paperwork of the actual instruction.

The Chairman asked Mr Dempster if he had knowledge of the actual date of instruction, which he did not though his clients had confirmed they had carried out his instruction, an example of which is at A1. His clients had not so far as he was aware made enquiry of the bank about the delay. So far as he knew they were aware of the three day requirement for transmission of funds, to allow the money to arrive with HMRC's bank by 07/02.

Having considered the facts I was satisfied that the Appellants had made arrangements to pay £50,000 in adequate time but that their instructions with regard to the balance paid out of their account on 06/02 had not be paid timeously. The funds must be paid by 07/02 to satisfy the provisions of the credit transfer system. With no evidence of the actual terms of the Appellant's instructions to their bank, this appeal cannot succeed.

The appeal is therefore dismissed.

No expenses are found due to or by either party.

MRS G PRITCHARD, BL., MBA., WS

CHAIRMAN

RELEASE: 17 JULY 2006

EDN/06/23