McDonald v Revenue & Customs [2006] UKVAT V19571 (10 May 2006)
                                                                                                    19571
DEFAULT SURCHARGE – Return and cheque received late – Cheque not met – No appearance by Appellant – No evidence as to circumstances – Appeal dismissed

LONDON TRIBUNAL CENTRE

	RODERICK  McDONALD	           Appellant

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

				Tribunal:	MISS J C GORT (Chairman)
					            MRS A WEST FCA	

Sitting in public in Plymouth on 6 April 2006

No appearance by or on behalf of the Appellant 

Mr Simon Chambers of the Solicitor’s Office for the Respondents

© CROWN COPYRIGHT 2006

DECISION

1.	This is an appeal against a default surcharge in the sum of £2,464.37 for the period 07/05.  It was raised at the rate of 15%.

2.	At the hearing of the appeal there was no appearance by or on behalf of the Appellant, Mr McDonald having indicated to the Revenue that he was not able to come and he was happy for the matter to proceed in his absence.  The appeal was therefore heard under the provisions of rule 26(2) of the Value Added Tax Tribunals Rules 1986.

3.	The due date for the Appellant to pay his value added tax was 31 August 2005.  A cheque and the return were submitted but were not received until 1 September 2005.  The cheque was returned marked “unpaid”, and a new cheque was submitted by the Appellant which was received on 9 September 2005.  We note that in a letter dated 17 October 2005 from the Revenue to the Appellant they state that the VAT return and cheque were received in time, but the cheque was returned unpaid.  From other documents we have seen it was clearly not the case that the cheque and return were received in time.  Mr McDonald had telephoned the Revenue’s advice service on 7 September 2005, 9 September 2005 and 21 September 2005.  On 9 September 2005 he had been told that his account had a nil balance.  This also was incorrect.  The explanation given to the Tribunal for this misinformation was that the fact that the cheque had not been met was not recorded on the system.

4.	By a letter dated 21 September 2005 Mr McDonald wrote to the Revenue protesting at having received a surcharge in respect of the period 07/05. His explanation for the late payment was that he had arranged a bank loan, but it was not put in place until the day after the cheque was returned.  We have been given no evidence as to the circumstances of the bank loan, and whether it was expected by Mr McDonald that it would be in place in time to meet this particular cheque.

5.	We note that the Revenue did not supply Mr McDonald with the usual letter setting out for a taxpayer in the circumstances of Mr McDonald the evidence which would be necessary for him to succeed in such an appeal, namely providing bank statements and any evidence as to the reason behind the cheque not being met.  The grounds of appeal in this case were, firstly, that, following his telephone call to the Revenue Mr McDonald, had not expected there to be any fine, having been told that his account was nil; but, more importantly, that if he had to pay the surcharge there would have to be resultant staff redundancies and the possible closure of his business, which would cause eight staff to become redundant.  In his letter of 21 September 2005 Mr McDonald stated that the surcharge would put his business in “even greater peril” and made future tax liabilities harder to pay.  

6.	We cannot at this stage say whether or not we would have found that Mr McDonald had a reasonable excuse for late payment of the surcharge in either this case or any of the preceding occasions when he had defaulted.  Without any evidence as to the nature of the business, or what financial arrangements he has made, it is not possible for us to allow the appeal.  Nonetheless, if Mr McDonald does have any evidence as to why the return and cheque were received late, or which might tend to show that there was an error on the part of the bank in not accepting the cheque, or there was any other reason outside his control for the cheque not being met, then he may wish to apply to reopen this hearing.  He has fourteen days from the date of release of this decision in which to ask for it to be set aside, should he wish to do so.

7.	In all the circumstances we can find no reasonable excuse for the late payment of the tax for the period 07/05 and this appeal is dismissed.

MISS J C GORT
CHAIRMAN

RELEASED: 10 May 2006

LON/06/0039