Wood & Anor v Revenue and Customs [2005] UKVAT V19161 (12 July 2005)
19161
Value added tax – penalties – default surcharge – whether reasonable excuse - no
LONDON TRIBUNAL CENTRE
AARON JOHN AND CHRISTINE JACQUELINE WOOD Appellants
- and -
HER MAJESTY'S REVENUE AND CUSTOMS Respondents
Tribunal: Dr David Williams (Chairman)
Miss Angela West FCA
Sitting in public in Cardiff on 22 April 2004
The Appellants did not attend and were not represented
Mr J Holl, Officer of Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2005
DECISION
- This case was heard in the absence of the Appellants and of any representative, the tribunal applying rule 26(2) of the Value Added Tax Tribunal Rules 1986 (allowing a hearing to proceed in the absence of a party if the tribunal so decides) at the application of the Respondents. The tribunal is satisfied that the Appellants and representatives have full notice of the hearing and have had adequate chance to arrange any attendance, representation or further written submission. It noted that the Respondents had previously consented to postponement of a hearing listed for September 2004. The tribunal saw the letter from the Appellants of 20 April indicating that they understood that the hearing would go ahead and stating the Appellants' views on the issues. This indicated that the immediate reason that Mr Wood would not attend was ill health and the immediate reason that Mrs Wood would not attend was attendance at a training course. The tribunal office had also received a fax from the representatives on 21 April indicating that the Appellants would be representing themselves.
- The issues before the tribunal are the defaults by, and surcharges imposed on and notified to, the Appellants by the Respondents as follows:
Period to Surcharge
March 2003 Notification only
June 2003 Notification only
September 2003 £428.72
December 2003 £987.63
March 2004 £1,344.92.
- Mr Holl took the tribunal through all the relevant papers in connection with these defaults and the relevant returns and payment history. The tribunal is satisfied that the Respondents had shown that the surcharges for September and December 2003 and March 2004 were properly imposed, and that therefore the burden of proof of showing that there was a reasonable excuse for the defaults fell on the Appellants. The Appellants were deregistered in September 2004.
- The tribunal find that the Appellants made the return due for the period to March 2003 a month late, those for June and September 2003 over a month late, the return for December 2003 nearly two months late, and the return for March 2003 a month late.
- The Appellants had, in a series of letters to the Respondents (and in letters to the tribunal), kept the Respondents informed of their difficulties. They also explained their financial problems and the attempts to sell, and difficulties in selling, the business. They had also had health problems. They had taken steps to ensure that they
paid the VAT due, but had not been able to comply with the timetable for payment. The business had eventually been sold in July 2004, and the Appellants had had many debts. Mr Wood was currently not able to work for health reasons, and Mrs Wood was seeking employment through retraining. Medical evidence relating separately to both Appellants and with various dates in 2004 was produced in support.
- The Respondents submitted that the Appellants had shown no reasonable excuse for not meeting their obligations in full and on time. Essentially the reason for default was insufficient funds, but there was no suggestion that this insufficiency was due to any abnormal problem of the business.
- The returns and payments were both repeatedly rendered late despite the fact that the Appellants had professional advisers during that period. "An insufficiency of funds to pay any VAT due is not a reasonable excuse": section 71(1)(a) of the Value Added Tax Act 1994. The tribunal therefore takes no account of this issue. The tribunal also noted that the business was essentially a cash business so that questions of serious debt relating to the payment of VAT by customers to the Appellants should not have arisen. Nor does the tribunal see any other aspect of the case that amounts to a reasonable excuse for the Appellants for any of the relevant periods. In particular, although both Appellants had and now still have medical problems these do not in the view of the tribunal excuse the recurring defaults or explain any individual default.
- The tribunal therefore finds that the Appellants have failed to discharge the burden on them of showing any reasonable excuse for any of the defaults. Accordingly, the tribunal confirms the Respondents decisions, notified to the Appellants, to impose surcharges in respect of the periods to September 2003, December 2003 and March 2004 and the amounts of those surcharges.
DAVID WILLIAMS
CHAIRMAN
RELEASE DATE: 12 July 2005
LON/04/1002
