18882
	
	DEFAULT SURCHARGE — tax return and tax due said to have been despatched in March — due date falling at end of April — return and tax found to have been received in May — no ground for discharging surcharge — non attendance of appellant — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	
	N A KAYS HORTICULTURAL PRODUCTS LIMITED	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	 Michael Johnson (Chairman)

Sitting in public in North Shields, Tyne and Wear on 16 November 2004

The Appellant was not represented

Mr J Holmes, counsel instructed by the Solicitor’s office of HM Customs and Excise for the Respondents

	© CROWN COPYRIGHT 2004

DECISION

1.	This is an appeal under section 59(7) of the Value Added Tax Act 1994 contesting a default surcharge for £469.13 (“the surcharge”) imposed in respect of the appellant’s VAT accounting period 1 January 2004 to 31 March 2004 (“the period”).  The appellant has sought to be relieved from the surcharge, claiming that it despatched its VAT return and the amount of tax due in respect of the period in good time before the due date of 30 April 2004.

2.	When the appeal was called on for hearing, it was apparent that no-one had attended to represent the appellant.  I nevertheless decided to proceed with the appeal, as I am empowered to do pursuant to rule 26(2) of the Value Added Tax Tribunals Rules 1986 (as amended).  I did this because no excuse had been advanced to the tribunal for the non-attendance, and because, on considering the circumstances of the appeal, the position appeared to me to be clear.

3.	Mr Holmes, representing the Commissioners of Customs and Excise (“Customs”), put before the tribunal a folder of copies of documents relevant to the appeal (“the folder”), including copies of letters written to Customs by Mr N A Kay, director of the appellant, and of Customs’ replies.

4.	The first of those letters was dated 25 May 2004.  In it, Mr Kay stated that he was writing to appeal against the surcharge.  He stated that his returns were always posted on time, and that the return in question was posted to Customs on Monday, 29 March.  He stated that any delay in delivery was not his fault.

5.	Customs replied by a letter dated 17 June 2004, in which they stated – 

•	That the return was received by them on 6 May 2004;

•	That £11,728.00 of the total of £23,456.51 tax declared by the return to be due was received by them on 13 May 2004; and

•	That the balance of the tax due was received by them on 28 May 2004.

They stated in that letter that as the appellant was late both with its return and its remittance, there would be no discretionary waiver of the surcharge.

6.	On 9 July 2004, Mr Kay wrote further to Customs.  He reiterated that the return had been sent “ … 3 days before the 31st” and that he could not be responsible for delays in delivery.  He also stated that the reason why some of the tax was not paid until the 28th was that he had sent two cheques, one of which had a mistake, and that it took Customs two weeks to return that cheque so that Mr Kay could alter it.  He ended his letter –

7.	“If you look at my payment record I have always had my returns in on time, and deserve the benefit of any doubt”.

8.	The contents of the folder confirm that there was just one previous instance of default, and then only by one day.  The appellant is recorded as having lodged its VAT return and paid its tax for its accounting quarter ending 30 June 2003 on 1 August 2003, rather than by the due date of 31 July 2003.  That is clearly a minor default, although it was sufficient to trigger the issue of a surcharge liability notice on 15 August 2003.  The surcharge is a first surcharge, imposed at the rate of 2%.

9.	I therefore accept that the appellant’s VAT accounting record is quite a good one.  

10.	I do not however think that it can be correct, as Mr Kay alleges in his letters, that he sent to Customs his VAT return for the period, and the tax due, on Monday, 29 March 2004.  There are several reasons why I say this.  

11.	The first is that 29 March was before the end of the period for which the appellant was accounting, which ended on 31 March.  It is improbable, I think, that the appellant would complete and send off the return on the Monday, when the accounting period finished on the Wednesday.  

12.	Secondly, the VAT return appears to confirm that it was completed at the end of April, not the end of March.  It bears the date “30/4/04”, and it is noticeable that someone appears to have altered the date from “30/3/04” to “30/4/04” by writing “4” over “3” for the month.  Again, I think that it is improbable that Customs would have made that alteration.  I conclude that the alteration was probably made by the signatory, Mr Kay.

13.	Thirdly, the return is stamped as having been received on the 6 May 2004.  That is much more likely to be the case if it was sent at the end of April, rather than the end of March.  

14.	Finally, the cheques sent with the return (the box indicating that a payment was enclosed with the return has been ticked) are recorded as having been one cheque for £11,728.00 and the other for £11,728.51, both for dates in May 2004.  It does not therefore seem that the appellant attempted to put Customs in possession of the tax at the end of March as he alleges.

15.	On the evidence before the tribunal, I accordingly conclude that the appellant’s case is without merit.  I find that both the VAT return and the tax were despatched to Customs so as to arrive in May 2004, and not the end of March 2004, as alleged.

16.	For Customs, Mr Holmes submitted that I should dismiss the appeal for the reasons set out above.  I accept his submissions.  

17.	I announced at the conclusion of the hearing that the appeal was dismissed.  This decision records the dismissal and gives the reasons for it.

18.	I further record that Mr Holmes applied for costs, but I exercised my discretion not to award costs.  This is because I do not believe that Customs would have applied for costs had Mr Kay, or another representative of the appellant, attended tribunal, although the outcome of the appeal would, I believe, have been no different.  That being so, it would be unfair to penalize the appellant for not having attended.

MICHAEL JOHNSON
CHAIRMAN
Release Date: 9 December 2004

MAN/2004/0416