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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Sutton v Customs and Excise [2004] UKVAT V18764 (08 September 2004) URL: http://www.bailii.org/uk/cases/UKVAT/2004/V18764.html Cite as: [2004] UKVAT V18764

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DEFAULT SURCHARGE — VAT return and cheque for tax despatched too late to arrive by due date — due date a Sunday — cheque dated on the Sunday — return and cheque posted on the day before — inevitable that return and tax would be received by Customs after the due date — no reasonable excuse apparent — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

MALCOLM GEORGE WARD SUTTON
& JULIE ANN DAWSON
(TRADING AS) PROTO TOOLS

Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr M S Johnson (Chairman)

Mrs R Dean (Member)

Sitting in public in North Shields, Tyne and Wear on 11 August 2004

The Appellants did not appear and were not represented.

Mr R Spragg, counsel instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004


 


DECISION

2. In this appeal the appellants are disputing a default surcharge for £951.65 @ 5% of the relevant tax, imposed in respect of their VAT accounting period ending 31 October 2003;
3. When the appeal was called on for hearing, it became clear that no-one had attended to present the appeal on the appellants' behalf, although the tribunal file showed that due notice of the date, time and place of the hearing had been sent to the appellants. Mr Spragg of counsel had come briefed to represent the Commissioners of Customs and Excise ("Customs"). He handed in a bundle of documents prepared by Customs. As the circumstances of the appeal appeared from the bundle, and as the appellants had not contacted the tribunal to indicate that the hearing was inconvenient to them, we determined to proceed to hear the appeal pursuant to rule 26(2) of the Value Added Tax Tribunals Rules 1986 (as amended);
4. The facts are as follows:
5. According to their VAT return for the quarter ended 31 October 2003, the appellants were due to pay Customs £19,033.10 in tax. The due date for payment of the tax was 30 November 2003. That date was a Sunday. The appellant Ms Dawson signed the tax return, which was dated 30 November 2003. From the endorsement of Customs at the foot of the return, it appears that 2 cheques were enclosed with it, one for £4,326.35 and the other for £14,706.75;
6. In a letter to Customs dated 30 December 2003, Ms Dawson asserted that the cheque for £14,706.75 was posted first class to Customs on 29 November 2003 (a Saturday). In the letter, Ms Dawson stated that the cheque for that amount was dated 30 November 2003; being the date the amount was due. Nothing was said in the letter about the cheque for £4,326.35;
7. In her letter, Ms Dawson said that the cheque for £14,706.75 should have reached Customs by Monday morning, 1 December. In fact, the return and the tax only reached Customs some days later. It is suggested in a subsequent letter from the appellants dated 28 May 2004 that this may have been because of a postal strike in some areas. It was that lateness which led to the imposition of the surcharge;
8. Ms Dawson also said in her letter, of 30 December 2003, that in fourteen years of trading the appellants had always endeavoured to be punctual with payments and asked for reconsideration of the default surcharge. The surcharge, however, only came about because, as we find, the appellants had previously been late with payments of tax. The bundle of documents before the tribunal indicates that their returns and payments had been 6 days late in respect of the appellants' VAT quarter ended 31 October 2002, after which a surcharge liability notice was issued, and 5 days late in respect of their VAT quarter ended 31 July 2003, after which the surcharge liability period was extended by notice until 31 July 2004.
9. Section 59(1) of the Value Added Tax Act 1994 ("the Act") provides that there is a default if Customs have not received by the due date the VAT return or tax that the taxable person is required to furnish or pay. It follows that if the due date is a Sunday, and the return and tax have been posted to Customs, to comply with the Act the return and the tax must have arrived with Customs before that day, because there are no postal deliveries on a Sunday.
10. In the present case, the appellants are up against the difficulty that they only posted their return on the Saturday, the day before the due date. Accordingly, having regard to the wording of the legislation, the return would have been too late, even had it been delivered on Monday 1 December, being the earliest date on which it might have been delivered.
11. Moreover, the cheque for £14,706.75 was according to Ms Dawson, dated 30 November 2003. Every Sunday is a bank holiday, so the earliest date on which the cheque might have been presented for collection was 1 December, whether or not the cheque was in the hands of Customs by then. Quite apart from the practice of banks, which habitually take three or four days to clear a cheque, there is no way in which the tax could have been received by Customs in time for the due date, namely 30 November 2003.
12. Section 59(7) of the Act says that if the tribunal is satisfied that the return and tax were "despatched at such a time and in such a manner that it was reasonable to expect that [they] would be received by [Customs] within the appropriate time limit" the tribunal can allow the appeal. We can also allow the appeal if we are satisfied that there is a reasonable excuse for the return or the tax not having been so despatched. In either case, the appellants would not be liable to the surcharge.
13. For Customs, Mr Spragg submitted that the tax and the return were not despatched in time, and there was no excuse apparent on the facts of this case for the lateness.
14. We feel that we must agree. The first week in December was too late for the return and the tax to have arrived with Customs, however early in the month they might conceivably have done so. The possibility of a postal strike would be irrelevant, as even had the postal service operated with the utmost efficiency, and delivered the return and cheques for the tax promptly on the Monday morning, 1 December, that would not have sufficed in law.
15. As we see it, the appellants could have despatched their return and cheques a few days earlier, and thereby have been sure that they would have been received in time. They have no reasonable excuse for not having done so. The appeal is not therefore made out, consequently we must uphold the surcharge. This appeal is accordingly dismissed.

MR M S JOHNSON

CHAIRMAN

Release Date: 8 September 2004

MAN/04/0067