20089

Value Added Tax  -   Default Surcharge -    Late payment resulting from payment on a Saturday when the banks were open but not processing payments so that payment was delayed not a reasonable excuse   -    Appeal dismissed

LONDON TRIBUNAL CENTRE

	THE JOINT POST LIMITED	           Appellant

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

				Tribunal:	HOWARD M NOWLAN (Chairman)
						ELIZABETH M MACLEOD, CIPM

Sitting in public in London on 21 March 2007

Ian Mackay, Chairman of the Appellant, on behalf of the Appellant

Phillip Webb of the Solicitors’ Office of HMRC, for the Respondents

© CROWN COPYRIGHT 2007

DECISION

1.     This was an unfortunate case where the Appellant suffered the significant default surcharge liability of £1,736.49 at the 5 % rate (neither of the earlier two defaults having actually resulted in any liability to pay a surcharge) because of a misunderstanding of banking practice.

2.     The Appellant paid its VAT liability for the period 08/06 by a BACS transfer that it instructed its bank, HSBC, to pay on Saturday October 7.        Such payments were not processed on Saturday even though the bank was “open for business”, and accordingly it was not until October 9, the following Monday, that Her Majesty’s Commissioners for Revenue & Customs (“HMRC”) received the payment, which needed to have been received by October 7. 

3.     Since manifestly the funds were available to make the payment on the Saturday the Appellant realistically confirmed that they would indeed have been available on the Friday, and that had the payment been made on the Friday, if needs be by CHAPS transfer, there would have been no late payment and no default. 

4.     The Appellant realistically accepted that it had no reasonable excuse for the late payment, and since there is no power to mitigate the level of surcharge when the level of surcharge seems disproportionate in relation to the degree of delay in making payment, the appeal must be dismissed. 

5.     We were pleased that Mr. Webb indicated that HMRC would make arrangements for instalment payment of the default surcharge liability, which we considered to be entirely appropriate in the circumstances. 

6.     We were indebted for Mr. Webb’s indication in 5 above, and sympathised with Mr. Mackay and his company. 

HOWARD M NOWLAN
CHAIRMAN

RELEASED:  2  April  2007

LON/2006/1287