18973
Default Surcharge – return received late by Commissioners – alleged postal delay - whether timeously posted in any event to achieve receipt on the due date – appeal dismissed.

EDINBURGH TRIBUNAL CENTRE

	NORMAN (UK) LTD	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	       Respondents

			Tribunal:	 (Chairman):  T Gordon Coutts, QC

Sitting in Edinburgh on Tuesday 1 March 2005

for the Appellant		Mr Tim Martin

for the Respondents	Mr Bernard Haley

© CROWN COPYRIGHT 2005.

DECISION

The Appellant a company which had got into the default surcharge regime by the period ending 05/03 appealed against a surcharge, then stated at 15% levied on a return due 30/6/04 but not received until 8/7/04.

The evidence from the company secretary Ms Heriot was that she had arranged for the posting of the return on the day before it was due to be received in Southend.  It would appear from the schedule of defaults that similar procedures had taken place for the returns due 30/6/03 and 30/9/03 which were each received a day late.  In such circumstances it is the practice of the Respondents to send a surcharge liability notice extension.  On each of those instances the sum assessed was than £200 and was not demanded as being de minimis.

Mr Martin for the Appellant stated that he was unaware of the 2% and 5% surcharges which had not resulted in a payment being requested although he was aware of a later 10% surcharge which was due on an admittedly late payment for the period ending 30/11/03.  It cannot be accepted that two such notices were not received by the company, whether Mr Martin saw them or not.  Accordingly the company were or should have been well aware that what they had done on those occasions, posting on the evening of the day before the due date, could not be guaranteed to comply with their statutory obligation.

In the course of the Hearing it emerged that the lateness for one earlier period could be explained by the company being the victim of fraud and consequent disruption,  In these circumstances Mr Haley for the Commissioners very properly agreed that the effect would be to provide a reasonable excuse for that occasion which would have the effect of reducing the amount of the surcharge for the period 31/12/03 to 5%. That would not be demanded in terms of the de minimis rule.  The assessment under appeal would reduce to a 10% surcharge i.e. £1,695.13.

In the course of his submission to the Tribunal Mr Martin protested at length about his good payment record.  That, however, on any view, was not unblemished.  He maintained that because the company had caused the cheque to be sent off on the 29th of June he had a reasonable excuse for the lateness which was delay in the post.

Accepting as I do, albeit with reservations, that there was some, indirect, evidence that the return was arranged to be despatched by post at 5.30 pm on the 29th June and also that had it been despatched on that date and the cheque cashed shortly thereafter there were funds to meet the VAT due, the view must be that it is for the taxpayer to comply with the provision that the return must be received by the Respondents on the due date.  While delay in the post could operate to provide a reasonable excuse it is for the taxpayer to make the payment timeously or to provide direct evidence of timeous dispatch.  There was no direct evidence from the employee who had charge of the dispatch, other than a letter on the firm’s notepaper.   That was not evidence given to the Tribunal on oath and in a matter of this sort does not provide sufficient proof of posting to satisfy the Tribunal.  Leaving the despatch of the cheque until 5.30 pm on the day before it was due in Southend was in the words of Mr Haley, taking a chance.  That chance failed.  It cannot be reasonably affirmed in the state of the postal services that the return in question would be received in Southend on the following morning and, as is known, in this instance it was not.

The Appellant has failed to comply with the statutory regime and the surcharge, modified to 10% is appropriate in the circumstances.  It only requires to be added that Mr Martin failed to appreciate that the matter of a surcharge is a statutory requirement.  It bears no relation to the sum due or indeed even to the extent of delay in payment.  While that may be draconian that is not a matter over which the Tribunal has any jurisdiction as yet, to modify.

T GORDON COUTTS, QC

CHAIRMAN

RELEASE:   7 March 2005.

EDN/004/120