DEFAULT SURCHARGES  -  no attendance by appellant at hearing of appeal  -  no evidence of circumstances explaining late receipt of tax and VAT returns  -  appeal dismissed
MANCHESTER TRIBUNAL CENTRE

 
 	
	EASTERN SURVEILLANCE SERVICES LTD 	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	Mr M S Johnson (Chairman)

Sitting in public in Birmingham on the 17th September 2003

There was no attendance on behalf of the Appellant

Mr R Mansell, of the Solicitor's office of HM Customs and Excise, for the Respondents

	© CROWN COPYRIGHT 2003

DECISION

 Nature of the appeal
1.	In this appeal, the appellant is challenging the imposition of 2 default surcharges in respect of its value added tax accounting periods ending 30 June 2002 and 30 September 2002.  I will call these “the June Period” and “the September Period” respectively.

2.	The surcharges, both at the rate of 15%, are for £1,738.22 in respect of the June Period, and for £1,139.34 in respect of the September Period.

No attendance on behalf of the appellant
3.	When the appeal was called on for hearing, it was apparent that there was no attendance on behalf of the appellant.  The tribunal however had the benefit of a bundle of over 60 pages of documents relevant to the appeal, handed in by the representative of the Commissioners of Customs and Excise (“Customs”) and put together by Customs, including copies of various letters from the appellant and representatives of the appellant.

4.	Considering that I had before me the information necessary to resolve this appeal, notwithstanding the non-appearance of the appellant, I decided to proceed with the hearing.  This decision is therefore made in accordance with rule 26(2) of the Value Added Tax Tribunals Rules 1986 (as amended).

Facts surrounding the default surcharge in relation to the June Period
5.	Mr Andrew Thompson, the Engineering Director of the appellant, wrote a letter to Customs dated 12 June 2002, in which he stated that he would like to submit the appellant's VAT return in respect of the June Period late, because Mr Thompson was on holiday for 2 weeks in July 2002.  He indicated that his absence on holiday would preclude the collection of money due to the appellant, prevent the carrying out of small jobs by the appellant and adversely affect the appellant's cash-flow.  He sought what he described as “a month's grace” on sending in the appellant's tax.

6.	The due date in respect of the June Period was 31 July 2002.

7.	Customs did not receive the letter dated 12 June 2002 at the time.  A copy of it was enclosed with a letter from Mr Thompson to Customs dated 25 September 2002, in which he indicated his desire to appeal against the default surcharge which had by then been imposed in respect of the June Period.  That surcharge came about because the appellant had failed to submit its VAT return for the June Period until September 2002. 

8.	Customs wrote to Mr Thompson on 22 January 2003, indicating that absence on business or holiday was not considered to be a reasonable excuse for having a default surcharge cancelled.  It is a matter for speculation how Customs might have replied to the letter of 12 June 2002 had it been received shortly after it was written, while the June Period was still current.  However it is a fact, as I find, that even had the month's grace sought by that letter been accorded, which it never was, the prospective period of grace was exceeded in any event by the non-submission of the return until September.  The VAT return was dated 6 September 2002 and it was received on or about 17 September 2002.

Facts surrounding the default surcharge in relation to the September Period
9.	The due date in respect of the September Period was 31 October 2002.  The VAT return was dated 31 October 2002 and it was received on or about 12 November 2002.  

10.	The appellant protests that it is unfair that the default surcharge in relation to the September Period should have been imposed when the return and the tax sent with it can only have been received a day or two late, i.e. at the beginning of November 2002.  However it is not explained why the return and the tax could not have been sent a day or two before they were.  The appellant's position is prejudiced by the fact that he cannot show that they 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"

as provided by section 59(7) of the Value Added Tax Act 1994.  That is to say, the appellant is not in a position to prove that they would have arrived by not later than 31 October 2002.   

Submissions on behalf of Customs
11.	Mr Mansell, appearing for Customs, submitted that, in the above circumstances, the appellant had not put forward acceptable grounds of appeal in relation to either of the default surcharges in dispute. 	

Decision of the tribunal
12.	The default surcharge in relation to the June Period is justified because the appellant never obtained the period of grace it sought, and even if the period of grace might have been forthcoming, which it is not clear it would have been, the appellant's conduct in not submitting its VAT return in respect of the June Period until September 2002 would have exceeded the period of grace.

13.	The default surcharge in relation to the September Period is justified because it is not apparent why the appellant could not have submitted its VAT return in respect of that period, and paid its tax, a day or two earlier.  As it is, they were clearly not sent so as to comply with the due date.

14.	This appeal is therefore dismissed.

M S JOHNSON
Chairman
Release Date

MAN/03/0206