United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2008] UKVAT V20839

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CEL Electrical Logistics Ltd v Revenue & Customs [2008] UKVAT V20839 (21 October 2008)

20839

DEFAULT SURCHARGE – time of posting – were returns dispatched at such time as it would have been reasonable to expect they would have been received on time – Respondents' procedures – appeal dismissed

MANCHESTER TRIBUNAL CENTRE

CEL ELECTRICAL LOGISTICS LTD Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Lady Mitting (Chairman)

Sitting in public in Manchester on 26 February 2008 and 8 July 2008

Donald Copley, Managing Director appeared for the Appellant

Kim Tilling, instructed by the General Counsel and Solicitor to Her Majesty's Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2008

DECISION

The Appellant company originally appealed against some twenty default surcharges over the period 12/05to 08/07. During the course of the hearing, the appeals in relation to the majority of the surcharges were withdrawn leaving in dispute the surcharges for periods 09/06; 03/07; 05/07 – 08/07 inclusive (some six periods in total, the Appellant being on monthly returns). The issue in respect of each period was whether or not the return and cheque had been "dispatched at such a time and in such a manner that it was reasonable to expect that it would be received by the Commissioners within the appropriate time limit" (Section 59(7)(a) VAT Act 1994).

The case originally came on for hearing on 26 February 2008 when it was adjourned to allow both parties to put in further evidence. The hearing resumed on 8 July 2008 when further evidence was heard but the case was adjourned again for the Respondents to put in further evidence by affidavit. Following receipt of this further evidence, the parties were directed to put in written submissions. The Respondents did. The Appellant did not.

The due date for the 09/06 return was Tuesday 31 October 2006. The return was dated 20 October. The return was stamped by the Commissioners as having been received on 14 November. The cheque which accompanied the return was dated 17 October and was recorded as having been received and processed by the Respondents on 14 November.

The due date for the 03/07 return was Monday, 30 April. The return was dated Saturday, 28 April and was stamped as having been received by the Respondents on 21 May. The cheque which accompanied the return was dated 28 April and is recorded as having been received and processed by the Respondents on 21 May.

The due date for 05/07 was Friday, 29 June. The return was dated 20 June and was stamped as having been received by the Respondents on 19 July. The cheque which accompanied the return was dated 20 June and was recorded as having been received and processed by the Respondents on 19 July.

The due date for the 06/07 return was Tuesday, 31 July. The return was dated 18 July and was recorded as having been received on 20 August. The cheque which accompanied the return was dated 17 July and was recorded as having been received and processed on 20 August.

The due date for the 07/07 return was Friday, 31 August. The return was dated 9 August and was stamped as having been received on 25 September. The cheque which accompanied the return was dated 9 August and was recorded as having been received and processed on 25 September.

The due date for the 08/07 return was Friday, 28 September. The return was dated 25 September and was recorded as having been received on 17 October. The cheque which accompanied the return was dated 25 September and was recorded as having been received and processed on 17 October.

Mr. Copley's evidence was that the office's month-end accounting systems were closed down approximately mid-month – usually the 14^th or 15^th of the month. It would take a couple of days for everything to be processed and the VAT return would be completed by one of his accounting staff, Anita, in the following week. Anita would complete the return with figures which she had taken off the computer and she would also calculate the amount due. She would make the cheque out at the same time which she would attach, unsigned, to the return. Anita would normally date the return and the cheque on the date of preparation and she would then leave them out for Mr. Copley to sign. The VAT cheque would be but one of the monthly cheque run and Mr. Copley would sign the entire batch sometime within the next three or four days. If for some reason he was going to be out of the office he would, on occasion, pre-sign a set of blank cheques. Mr. Copley would place the VAT return and cheque in the Respondents' addressed envelope which Anita would have attached to the return for him. Mr. Copley's evidence on the procedure for posting the return differed somewhat. On the first day of the hearing he said the envelope would have been placed with others in the post tray for Mrs. Julie Dixon, his senior administrator, to take to the main post office on her way home. On the second day he told us that he would post the bundle on his way home. I attach no significance to this apparent discrepancy. I assume that the procedure probably varied from day to day and whoever found it most convenient would take the post. Mr. Copley told me that he worked Saturdays so it would not be unusual for a return to be dated on a Saturday. However, in fact, as the date was inserted by Anita, it would have to be she who worked Saturdays as well as Mr. Copley.

Mr. Copley was so concerned at the receipt of default surcharges when he believed that the returns had been posted in good time that for one period he did what he called a "test run". For period 07/07, he told us that he posted the return on 9 August and obtained from the post office a certificate of postage to prove the date. He then ascertained from the Respondents that the return was recorded by them as having been received on 25 September. One of the main reasons for adjourning the hearing at the end of the first day was to enable Mr. Copley to produce this certificate of postage to us, but unfortunately it could not be found. He said that it had not been realised at the time how significant it would become.

In readiness for the second day of the hearing, the Respondents obtained affidavit evidence as to the procedures for processing returns on receipt. The evidence was in the form of an unchallenged witness statement from a Frances Sutton. She said that all mail delivered by the Post Office to Southend-on-Sea was delivered in stacking boxes inside a cage. Most mail was processed on the day it was received but any that could not be had the date of receipt noted on the stacking box and the boxes were then stored in a secure location until the mail could be processed. In the processing section, the return would be removed from its envelope and stamped with the date of receipt. The process was carried out under strict supervision and at the end of each working day the whole area would be thoroughly searched to ensure that no item had been left unprocessed.

The Respondents also put into evidence a witness statement, which again was not challenged, from Kathryn Yourston of the Royal Mail. Her evidence concerned the collection of post from the Appellant's local mailbox. Collection times were at 12.30 and 17.30. Collected mail would be routed to the Leeds Mail Centre on the same afternoon or evening as it was collected. It would be processed during that same afternoon or evening and mail for the Commissioners would then be distributed to the Southend Mail Centre via the National Distribution Centre at Daventry, arriving during the early hours of the following day. The mail would be delivered to the VCU at Southend during that morning. Mrs. Yourston was also able to testify that there were no disruptions to postal collections which would have affected next day delivery to the VCU.

Although Mr. Copley did not put in a written submission, his case throughout the hearing had been that the returns for the periods which remained in disputed were all posted in such time as they should have been received by the Respondents by the due date. Mr. Copley readily accepted that in some cases the returns had been posted so near to the due date that he could not with certainty have predicted they would arrive in time and it was in these periods that he withdrew the appeals. For the periods which remained under appeal, the returns had been posted so far in advance that there was no reason, in Mr. Copley's submission, that they should not have been received on time. If they were not so received then it had to be as a result of failings by the Royal Mail or the Respondents in their own internal procedures.

The burden of proof is on the Appellant to satisfy the tribunal, on the balance of probability, that the returns were dispatched in such a way and at such a time that they should reasonably have been expected to have been received within the appropriate time limit. The Commissioners, in the form of the two witness statements, put in a chain of evidence which would take the return from the time when it was posted by the Appellant to the time when it was received, opened and processed by the Respondents. The witness statements were not challenged and I therefore accept that evidence as given. The processing dates on the returns in question are all within the time limits that would be expected and no evidence was put in by or on behalf of the Appellant to throw any doubt upon the Respondents' processing. The Appellant had no evidence of postage, either in the form of a postage book or a Royal Mail certificate of postage. It is unfortunate that in the one period when Mr. Copley obtained a certificate of postage that certificate was lost and was not available to the tribunal. Mr. Copley's evidence as to his office procedures for completion of the return, the cheque, and postage was not entirely consistent but that really is not particularly material. What matters is the complete absence of any substantiating evidence that the returns were posted at such a time that they could reasonably have been expected to have been received by the due date. In the absence of any such evidence, the Appellant has not been able to discharge the burden of proof which is upon it and the appeal has to be dismissed in respect of each and every period.

The Respondents, in their written submission, confirmed that no costs would be sought and no direction as to costs is therefore given.

MAN/07/1303

LADY MITTING

CHAIRMAN
Release Date: 21 October 2008