18659

Default Surcharges:  Late admission of appeal allowed.  Appeals dismissed.

EDINBURGH TRIBUNAL CENTRE

	SCOTT INDUSTRIAL PRODUCTS	Appellants

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	       Respondents

			Tribunal:	 (Chairman):  Mrs G Pritchard, BL., MBA., WS

Sitting in Edinburgh on Friday 4 June 2004

for the Appellants		Mr D McMullen

for the Respondents	Mr A McCue

© CROWN COPYRIGHT 2004.

DECISION

This is an appeal against Default Surcharges applied for the quarters 07/02 and 04/03.  Both of these had a Nil outcome as for the 07/02 period the position was that a Default Surcharge Liability Notice was served which is not an appealable matter.  For the period 04/03 the Default Surcharge was due at 2% but was less than £400 and therefore no Default Surcharge was applied.  

However the Appellant had used access to the Tribunal to ask the Tribunal to include in this appeal an appeal against Default Surcharges applied for the quarters 10/97-04/1.  

After some discussion it was agreed that the appeals in respect of quarters 10/97 and 10/98 should be admitted to probation.  The reason for this was that it appeared that at no time had the Appellant been advised of the right to proceed with an appeal against the Default Surcharges to an appeal Tribunal.  He had always been pointed in the direction of the Debt Management Unit though he had still always wanted to appeal against the Default Surcharges and indeed had had advice from a Customs Officer that that was a possibility.  In respect of the particular two quarters referred to he could substantiate bad debts.  So far as the others were concerned no evidence was provided.

It was not until his most recent discussion with Customs and Excise that he became aware of how access to this Tribunal could be gained.  

The Tribunal therefore looked at the grounds which he offered for the appeals against these two previous Default Surcharges referred to.

Mr D McMullen appeared on behalf of Scott Industrial Products which is a partnership run by him and his partner.  Mr A McCue appeared on behalf of the Respondents.  The evidence consisted of a bundle of papers submitted by the Commissioners and where reference is made to any page of the said bundle, it should be treated as repeated here.

In respect of the appealed quarters the position was as follows:

10/97 – there was a particular bad debt of £15,000
10/98 – there was a particular bad debt of £24,000

The Appellant runs a company making janitorial supplies of industrial clothing, tools, etc.  It is a small business run as a partnership with only Mr McMullen signing cheques and looking after financial matters.  His partner deals with sales.

In the 10/97 quarter a customer, Peter Craig & Co Ltd had a contract to install central heating in schools.  The Appellant supplied them with the necessary equipment with a credit facility of £15,000.  However due to cash flow problems the company went into liquidation.  The Appellant was left with this as a bad debt.  He looked at priorities for paying bills and paid VAT on assessments raised by the Commissioners instead of doing returns.  However his turnover was accepted as around £400,000.  On the principle laid out in Steptoe v Commissioners of Customs & Excise (LON/89/745Z), the proportion this debt bears to his general business is insufficient to allow this appeal.

In the 10/98 quarter a customer Mr Cranston was permitted to build up a debt of £24,000.  Mr McMullen’s father was ill and he was off work a lot.  His partner in the business allowed this new customer credit as he was working on the A74 on a big contract.  However his company too went into liquidation very suddenly.  This caused big financial problems, for the Appellant company.

Again Mr McMullen decided other matters had priority over VAT.  The Appellant’s turnover was agreed as around £400,000, at that time.  Again using the Steptoe (LON/89/745Z) principle, the amount of the debt is insufficient to found a reasonable excuse for non payment of VAT.

The appeal therefore fails.

No expenses are due to or by either party.

MRS G PRITCHARD, BL., MBA., WS

CHAIRMAN

RELEASE:  17 JUNE 2004

EDN/03/110