20270

Default surcharge – Appellant notifying Commissioners of change of address – VAT forms sent to old address – Late returns and payment – Whether reasonable excuse to surcharges

LONDON TRIBUNAL CENTRE

	HAMILTON YOUNG CONSULTANCY LTD	           Appellant

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

				Tribunal:	DR KAMEEL KHAN (Chairman)
						MRS E MacLEOD CIPM

Sitting in public in London on 20 June 2007

Mr B Hamilton Young, Director, for the Appellant

Mr J Holl, Senior Officer, HMRC, for the Respondents

© CROWN COPYRIGHT 2007

DECISION

1.	This is an appeal against three default surcharges imposed by the Commissioners for the period June 2005, September 2005 and December 2005.

2.	The Appellant is a small private company.  Its main business is property consultancy services.  The company was registered for VAT in 1991.  Mr Barry Hamilton Young is a director of the Company.  The address of the company given on the VAT Application for registration is 45 Great Peter Street, London SW1P 3LT.  This is the address to which VAT returns and other correspondence from HMRC was sent.  On 21 January 1998, the Appellant wrote to HMRC informing that the Company’s address had changed to 22-26 Albert Embankment, London SE1 7TJ.  This letter was stamped as received by the City VAT office on 14 April 1998.  In spite of several telephone calls from the Appellant to HMRC requesting the change of address, nothing was done until February 2006 to change the registration details.  During this eight year period, the Appellant had collected mail from the previous address through a friend who had occupied a suite at the address.  When the friend moved offices, it was no longer possible for the Appellant to collect mail at that address and this was the period when late returns and payments occurred.

3.	The Appellant requested a review of the surcharges imposed for the periods 06/05, 09/05, 12/05 and 03/06.  Upon review, HMRC agreed to cancel the default for the period 03/06 but to retain the other surcharges.  HMRC pointed out that while they had not updated the Appellant’s address, it was their responsibility “to chase any blank returns that were not received and request duplicates to ensure timely submission.”  (HMRC’s letter dated 11 July 2006).

4.	Mr Hamilton Young for the Appellant said that in spite of having notified HMRC in writing of the change of address of the company and made several telephone calls to request both the change of details and duplicate VAT returns to be sent to the correct address, this did not happen until after the due date.  The Appellant believe that they have a reasonable excuse for the late submission of returns and payment.  Mr J Holl for HMRC argued that there is no reasonable excuse under section 59 VATA 1994.  He accepts that HMRC were at fault in not amending the Appellant’s details in a timely manner.  However, he felt that since the responsibility is on the taxpayer to both pay their taxes and to submit returns on time, the Appellant should have done more given HMRC did not act until 2006.  If the returns were not being received, a manuscript or photocopied return could have been submitted together with the outstanding taxes.  At the very least, the tax should have been paid by the Appellant. He further submits that the request for VAT returns were after the due date and that there is no reasonable excuse to the surcharges.

5.	The question for the Tribunal is whether the Appellant has a reasonable excuse for the late VAT returns and payment where there is a failure by the Commissioners to send returns to the correct address, when requested to do so.  The Tribunal also has to look at the conduct of the Appellant.  The Appellant continued to receive forms at their old business address through a contact at that address who collected their mail.  This arrangement continued for a long period after the Appellant had moved from those premises.  The Appellant was not prevented from receiving the VAT returns because they were wrongly addressed by HMRC.  It appears that only when the Appellant’s contact had moved from 45 Great Peter Street, London SW1P 3LT, were the returns not received since there was none to collect their mail and this led to the late submission of returns.  The Appellant could have submitted manuscript or photocopied returns with their payment.  The VAT returns presented to the Tribunal were not complicated or detailed and while one has to be sympathetic to the time demands on small businesses, it would not have been difficult to prepare and submit manuscript or photocopied returns.  It would have been clear to the Appellant that once their contact had moved they would not have access to VAT returns sent to the old address and some alternative arrangement for the submission of returns should have been made at that time given the primary obligation in the legislation is on the taxpayer to submit returns and payment.  In the circumstances, the Tribunal decides that there is no reasonable excuse for the late submission of returns by the Appellant.  

6.	The Tribunal wants to recognise that the taxpayer had poor service from HMRC and may have cause for complaint and should be provided with relevant information to make such complaint.

7.	No issues as to costs were raised in this appeal.

DR KAMEEL KHAN
CHAIRMAN

RELEASED: 31 July 2007

LON 2007/645