19605

DEFAULT SURCHARGE – Manageress of public house had breakdown – Owner very concerned and distracted – Payment sent off nine days late – Locum put in place – Arrangements made in time with bank to meet cheque – Held reasonable excuse for late payment – Appeal allowed

LONDON TRIBUNAL CENTRE

	A T WARNER & SONS LTD	           Appellant

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

				Tribunal:	MISS J C GORT (Chairman)
						MRS C de ALBUQUERQUE

Sitting in public in London on 19 April 2006

The Appellant appeared in person

Mr Jonathan Holl, Advocate, of the Solicitor’s Office, for the Respondents

© CROWN COPYRIGHT 2006

DECISION

1.	This is an appeal in respect of a default surcharge for the period 03/05 in the sum of £720.22.  

2.	Payment was due on 30 April 2005, but was not in fact received until 9 May 2005.  The reason given by the Appellant for this late payment was that “due to illness” there was an oversight in paying the amount.

3.	The Appellant is a company which runs a public house called the Hunters Inn.  Mr A T Warner is a director of the company and his son is a co-director, but his son takes no part in the running of the business.  Mr Warner employs a manageress to run the public house, and she lives on site with her 15 year old son.  

4.	The company employs a stock-taker who comes in once a month, and approximately two weeks before the due date for the VAT return, he prepares it for Mr Warner.  

5.	In March 2005 the manageress of the Hunters Inn had a nervous breakdown.  We were not given the full details of the circumstances, other than to say that this was occasioned by the behaviour of her son, and necessitated her being put on medication and taking a considerable period of time off work.  Mr Warner called in a locum to take over the running of the pub, and was fortunate to find an experienced man able to do the job.  

6.	The company had previously been in default on three occasions, once in 2003 and twice in 2004.  On each occasion the payment had been received in just over a week after the due date.  On none of the previous occasions had a default surcharge been levied, in that there had been no monetary consequence to the Appellant, however surcharge liability notices had been issued with the accompanying notes explaining the default surcharge regime.  

7.	Mr Warner described to the Tribunal his feelings of guilt at having been unaware of the stress which the manageress was undergoing.  He himself had never run a public house prior to his acquiring the business some five years previously.  He described her illness as placing a great deal of stress on him.  He, himself, had brought in the doctor for the manageress and had run the premises until the locum had arrived.  He fully accepted that he had made an error in overlooking the requirements to send off the cheque in time.  He accepted that all he had to do was to sign the return and sign and post it and the cheque.

8.	We have seen the company’s bank statement for the end of April and the beginning of March.  It shows a credit balance of £1,450.06 as at 29 April 2005.  Mr Warner’s evidence that he had an arrangement with his bank manager that he could run an overdraft as necessary, and this would be met from his personal bank statement, is borne out by the fact that the cheque which was received on 9 May was met.

9.	We found Mr Warner to be a completely reliable witness.  We accept, as had the Commissioners, that it was not his intention to avoid paying the tax which was due at the time.  We also accept that he was not short of funds at the time.  It was his evidence that he had not read the notes on the back of the default surcharge notices he had received earlier, and was unaware of the fact that he would be liable to a penalty if he were to default subsequently. Were Mr Warner a conscientious businessman, he clearly would have been so aware. However, he has made every possible effort to ensure the proper running of the business, in that he has appointed a stock-taker to prepare the VAT returns for him in good time, and has a manageress to run the business.  He also put in place at the earliest opportunity a locum in the absence of  the manageress. The fact that Mr Warner was distracted and, as he put it in one of the many letters which he wrote to the Commissioners in respect of this matter, in the throes of a “trauma that descends when interruption to a business happens when a vital person is taken sick.”  Apart from Mr Warner’s own evidence as to this fact, it is borne out by the fact that the return for the period 03/05 is the only one of the four returns which we have seen before us which has not been signed by Mr Warner prior to sending to the Commissioners.

10.	Whilst this is clearly a borderline case, nonetheless we find that Mr Warner, being a very decent individual, was more than usually perturbed by the manageress’ breakdown, and this caused him to overlook the necessity of sending his return by the due date.  In all the circumstances we find on this occasion that he has a reasonable excuse for the late payment and this appeal is allowed.

11.	No order for costs.

MISS J C GORT
CHAIRMAN

RELEASED: 1 June 2006

LON/05/939