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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Vent Air Systems Ltd v Revenue & Customs [2008] UKVAT V20897 (15 December 2008) URL: http://www.bailii.org/uk/cases/UKVAT/2008/V20897.html Cite as: [2008] UKVAT V20897

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20897

Value Added Tax - Default surcharge - Late payment resulting from problems with changing staff and the resultant difficulty in making payment on line - Appeal dismissed

LONDON TRIBUNAL CENTRE

VENT AIR SYSTEMS LIMITED Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: HOWARD M NOWLAN (Chairman) MRS NORAH CLARKE (Member)

Sitting in public in Cardiff on 26 November 2008

Mrs. Diane van Beeks, Financial Controller of Vent Air Systems Limited on behalf of the Appellant

Mrs. Crinnion of the Solicitor's Department of HMRC on behalf of the Respondents

© CROWN COPYRIGHT 2008


 


DECISION
1. This was a default surcharge appeal where the Appellant had been late in filing its return and paying its VAT for the period 06/08. The return was not filed until 11 August 2008 and payment not received until 14 August, when both should have been filed and received by 31 July. The amount of the surcharge imposed, at 2%, was £1,020.02.
2. The initial cause of the problems that resulted in the late payment of the VAT was the fact that the former Financial Controller of the firm that manufactured and assembled ventilation equipment left the appointment, allegedly "throwing her keys on the table" at some time in May 2008, following a personality clash with the Managing Director. The relevant Financial Controller had only been appointed in January, and it was asserted that she had not been sufficiently qualified for the job in question. In addition to the claim that the company's records were in some confusion, further problems that emerged on her departure were that she had changed the security code to access the Sage computer accounting system used by the company and no-one knew the new code that she had chosen. Since the directors were "artisans", in other words people actively working in the manufacture and installation of ventilation systems, and the only other employee was a secretary, no-one knew how to input further information onto the Sage system, so that records were then maintained manually. Furthermore for some unspecified period it was impossible to gain access to the information on the computer.
3. Evidence was somewhat thin since the Appellant's representative herself had only been appointed after all the relevant events, and after one or two temporary and part-time staff had been engaged to replace the Financial Controller who had left in May.
4. When the Appellant approached the filing and payment date (in other words 31 July) for the period 06/08, it appears that all the records had been accessed because the Appellant's external accountants, Marsh Bessant, had compiled the VAT return, and that had been signed by the Accountants and dated 30 July. It appears that this return was then left with the Directors with a view to them despatching it, and arranging payment, as had been the practice in the past. Since in the past payment had been made on-line, and could also of course be made by the BACS or CHAPS payment facilities, payment could still have been made within the further 7 day period within which payment could be made in those ways, without there being a default. All that occurred however was that on 6 August, the secretary in the Appellant's office rang the VAT helpline with various questions concerning her difficulty in accessing the HMRC web-site in order to input the figures on the return, and make payment. The official gave the correct information in relation to the questions asked, but for one reason or another no-one succeeded in filing and paying on-line on that or the following day. The official on the Helpline had unfortunately not volunteered the information that it would still have been possible, on 6 or 7 August, to make a CHAPS payment without going on-line at all, whereupon there would have been no default. In the result the return was posted and received by HMRC on 11 August and the VAT was paid by a cheque signed and posted on 13 August.
5. Whilst initially the "reasonable excuse" asserted for the late payment of the VAT had been geared to the departure of the former Financial Controller, and to the difficulties in accessing the Sage accounting records, we cannot accept that this excuse justifies the late payment. Although the evidence was sparse, it was plainly the case that the external accountants had somehow accessed all the records, some IT consultant having accessed the Sage system, because the VAT return had been completed on 30 July. We have no idea whether the outside accountant should have indicated to the directors the various ways in which the return could be filed, and more relevantly the ways in which payment could be made by 7 August, or whether the directors (there being at the time no full time Financial Controller) should have sought advice as to how to pay on time. On 30 July however the return had been completed and the cash was apparently available to make the payment and no particular reason has even been volunteered as to why payment, which could have been effected in four different ways between 30 July and 7 August was not in the event made on time.
6. We accordingly dismiss the appeal.
HOWARD M NOWLAN CHAIRMAN RELEASED: 15 December 2008

LON 2008/2099