19674

Default Surcharge – Reasonable excuse – Time to pay agreement – Appellant’s understanding that time to pay agreement precluded default surcharge – No evidence of agreement to this effect – Appeal dismissed

LONDON TRIBUNAL CENTRE

	ARTISAN INSTALLATIONS	           Appellant

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

				Tribunal:	STEPHEN OLIVER QC (Chairman)
						JOHN ROBINSON

Sitting in public in London on 26 July 2006

No appearance for the Appellant 

S Chambers for the Respondents

© CROWN COPYRIGHT 2006

DECISION

1.	Artisan Installations appeal against a default surcharge assessment for the 10/04 period.  The amount of the default surcharge is £1,443.16 and it has been imposed at the 15% rate.

2.	No one attended the hearing to represent Artisan Installations. Shortly before the hearing a telephone call was made by the Tribunal to Mr Whitehead. We understand Mr Whitehead to be the proprietor of Artisan Installations.  He said that he could see no reason for the hearing because the matter had been settled some three or four months before and the Customs had been paid what they were seeking. This was not the understanding of Mr Chambers who represented the Customs. The information he had was that, as on 14 July 2006, £1,443.16 was still outstanding to the Customs from Artisan Installations. There was no record on the Tribunal’s file that Artisan Installations have withdrawn their appeal. 

3.	We decided to go ahead and hear the appeal.  Rule 26 of the Tribunals Rules empowers us to do so.  Because we have heard and determined the appeal in the absence of anyone from Artisan Installations, rule 26(3) applies.  This enables Artisan Installations to make an application within 14 days of receiving this decision to have the matter reconsidered by the Tribunal and to have a new determination on such terms as are fair and just in the circumstances.  Artisan Installations are therefore free to apply for the matter to be re-opened.  They should know that they cannot be heard by this Tribunal unless someone comes in person to present their case.

4.	Artisan Installations’ return for the 10/04 period was signed by Mr David King on 12 November 2004 and received by the Customs on 15 November.  It showed tax payable of £9,621.  The tax payable was outstanding at the due date, i.e. 31 October 2004.  On 17 December 2004 a Notice of Assessment of Surcharge was issued to Artisan Installations.  Artisan Installations appealed on 11 May 2005.  The grounds of appeal are as follows:

“Lack of information and understanding from VAT office at time of paying VAT”.

5.	A letter from Artisan Installations, which we understand to be a firm of builders, explains the background to their appeal:

“We have been served notice of surcharge of £1,443.16 on our VAT payment for the period above.  (The period above is the 10/04 period.)  As you can see from the enclosed information that correspondence took place with Mr Delaney who agreed payment terms and that there would be no surcharge.  As we got our VAT form in on time with the correct details and made an arrangement with Mr Delaney we were surprised and disappointed to be penalised.  Had we’d of known about the surcharge we would have attempted to explore alternative avenues to obtain the necessary funds to pay in one instalment on time.

Mr E has since become our case manager and has been extremely unreasonable when dealing with our case.  He has refuted all knowledge of an arrangement with Mr Delaney and refuses to investigate our claims any further.  Mr E has since informed us that Mr Delaney has been off sick since first dealing with our case back in October.”

6.	Had someone from Artisan Installations attended the hearing, we might have had a fuller account of the alleged arrangements with Mr Delaney. As it is, the Customs were unable to provide any record of any such agreement as is referred to in the letter, i.e. that no default surcharge would be imposed if the terms of the time to pay agreement in question were adhered to.  Mr Chambers for the Customs referred us to a log entry of telephone calls between the Customs and Artisan Installations.  The note for 5 October 2004 records a conversation with Mr King. This says -  “he sent cheque for £1,299.51 (unpaid cheque) yesterday also rtn for 07/04 approx £13,000 advise Mr King he need to add DS at 15% equals £15,000 approx.”  That telephone record shows that Mr King’s attention was expressly drawn to the fact that default surcharge would be imposed, at least for the 07/04 return.  We note in this connection that Artisan Installations or its predecessor has been incurring default surcharges on at least eleven occasions up to 10/04.  We note, for example, that the Notices of Assessment and Surcharge Liability Notices have, written on the back, notes which include the following:

“If you expect to have any difficulties contact either your local Customs and Excise Debt Management Unit or the National Advice Service as soon as possible.  An agreement with your local Debt Management Unit to defer payment does not prevent you being surcharged for defaulting.”

We note also from the log of the telephone conversation of 5 October 2004 that the relevant notice relating to the cash accounting scheme had been sent to Mr King.  At the end of paragraph 4 of the notice these words are found:

“If your return and all the VAT shown as due is not received by the VCU by the due date we will record a default.  We may issue a surcharge for the default even if you have an agreement with your Debt Management Unit to defer payment.”

7.	Finally in this connection we were shown a record of a telephone conversation from the Customs’ screen print this contains an entry of a telephone conversation on 21 December 2004.  This contains these words:

“Trader was querying 10/04 default surcharge that Mr Delaney has already told him he won’t incur default surcharge when he accepted his TTP.  I told him that I also brought it to his attention on 10 December 2004 which he denied.  I also told him his return is late hence automatically incur DS.  Trader doesn’t want to listen and insists that Mr Delaney has assured him he won’t incur DS. …”

8.	On the information available to us we cannot be satisfied that any agreement was reached between the Customs and Artisan Installations to the effect that no default surcharge would be imposed if Artisan Installations complied with the terms of the time to pay agreement. We cannot therefore accept Artisan Installations’ case that an agreement of that sort displaced the right of the Customs to impose the default surcharge for the 10/04 period.

9.	Nor can we accept the argument for Artisan Installations, put forward in their Notice of Appeal, that they had been given insufficient information. We do not accept that Artisan Installations were unaware of the surcharge regime. It seems to us that they were properly issued with a default surcharge assessment for the 10/04 period.

10.	We dismiss the appeal.

STEPHEN OLIVER QC
CHAIRMAN

RELEASED: 31 July 2006

LON/05/609