Misdeclaration penalty – mitigated on review – no grounds for further mitigation – appeal refused

EDINBURGH TRIBUNAL CENTRE

	FOUR MILE INN	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	       Respondents

			Tribunal:  GRETTA PRITCHARD, BL., MBA., WS(Chairman)

Sitting in Edinburgh on Tuesday 28 OCTOBER 2003

for the Appellants		Mr W MacPherson

for the Respondents	Mr A McCue

© CROWN COPYRIGHT 2003.

DECISION

The appeal is against the amount of a misdeclaration penalty imposed by the Respondent by Notice of Civil Penalty due on 19 December 2002, in the sum of £5250, mitigated on review by the Respondent by 10% to £4725, on which interest runs till paid.

	The Appellant was represented by Mr MacPherson who gave evidence on his own behalf as the person responsible for the VAT returns.   The Respondent was represented by Mr A McCue.

	The Appellant explained that when he sold the Four Mile Inn, VAT was charged on the sale price in the sum of £35,000.  When he sold the premises, the sale price was arrested in the hands of his Solicitors in November 2001.  He had had an outstanding debt due to the Bank of Scotland.  Funds had been freed at the time of the settlement and had been used to pay the brewers who funded the purchase of the premises to free their security.  A free balance was available to him from July 2002.   He had deposited the VAT money due in a separate account and had intended declaring and paying it.   He gave no reason for not having done so.

	Mr McCue advised that the Respondents became aware of the sale of the premises when the purchaser made an input tax repayment claim.  A check was investigated.   Mr Shields the Investigating Officer contacted Mr MacPherson in November 2002 to ask why he had not declared and paid the VAT on his 12/01 return.   Mr MacPherson stated he was aware that the Respondents would be in touch and was willing and able to pay the VAT.

	On the assessment of the Civil Penalty at 15% of the amount of VAT of £35,000 due Mr MacPherson protested that he had already paid interest.  He asked for a review as he had, he declared, never intended depriving the Respondents of the VAT.   Mr McIntosh the Reviewing Officer mitigated the penalty by 10%.

DECISION
	It was only at this Tribunal it became clear Mr MacPherson had been in a position to pay his VAT of £35,000 on the sale of his premises by July 2002.  He had not declared the VAT on his 12/01 return which was the correct procedure even if he could not pay it.  It is the failure to declare which is penalised.   He could have declared it at any time and particularly from July 2002 when he also could have paid it.  I found there were no grounds for further mitigation of the penalty which had itself been correctly applied.

	No expenses are found due to or by either party.

MRS GRETTA PRITCHARD, BL., MBA., WS
CHAIRMAN
RELEASE DATE:

EDN/03/58

T GORDON COUTTS, QC

CHAIRMAN

RELEASE 

EDN/