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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Abbie Limos Ltd v Revenue & Customs [2007] UKVAT V20435 (31 October 2007) URL: http://www.bailii.org/uk/cases/UKVAT/2007/V20435.html Cite as: [2007] UKVAT V20435

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20435

MISDECLARATION PENALTY — two periods — all VAT and interest paid — import of limos — three reductions allowed by Customs — reasonable excuse and mitigation considered — appeal allowed

MANCHESTER TRIBUNAL CENTRE

ABBIE LIMOS LIMITED Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Elsie Gilliland (Chairman)

Elizabeth Pollard

Sitting in public in York on 5 September 2007

The Appellant appeared in person

Bernard Haley, Advocate of the Solicitor and General Counsel for HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2007


 


DECISION

1. The appeal before the tribunal was that of Abbie Limos Ltd. (the Appellant) against 2 misdeclaration penalties imposed by Customs triggered by Vat liabilities for the periods 04/05 and 10/05. It was confirmed that all the outstanding tax with interest had been paid by the Appellant. On 2 occasions following further consideration by Customs the 2 penalties were reduced so that the amounts due when the matter came before the tribunal were respectively £854 and £968. After the submissions made by David Swann a director of the Appellant at the hearing the advocate for Customs made a further concession and reduced the 2 penalties to £390 and £450 respectively. However the case put by Mr. Swann was that the Appellant should not be required to pay any penalty in that a simple error had been made with no element of criminality attached and it had paid the tax and interest.
2. The Appellant imported stretch limos for use in its business. Mr Swann informed the tribunal that there followed a long and complex licensing procedure within the UK delaying the completion of HP arrangements which could not be finalised until a vehicle was taxed. A genuine error was made which was not picked up by the Appellant's accountant as it went into the next tax year.
3. Both Customs and the tribunal have power on an appeal to consider whether the taxpayer has a reasonable excuse for its conduct and have power to mitigate a civil penalty to nil even if they think proper. Mr. Haley for Customs told the tribunal that two vehicles had caused the problem and that there had been double claims on the purchase of vehicles by the limo business operated by the Appellant.
4. We consider first the issue of reasonable excuse looking objectively at the inaccuracy from the standpoint of the reasonable businessman. Mr Swann himself looked after the paperwork and used a computer. We understand that a bookkeeper now does the VAT. He also had the services of an accountant. There was no intervening problem such as illness. It is the obligation of any taxpayer to be aware of the tax requirements affecting his business. We are not satisfied that there is a reasonable excuse.
5. On the issue of mitigation a substantial reduction of some 75% of the original penalties has already been allowed by Customs. There was no implication of dishonesty. Mr. Swann took seriously the Appellant's obligation to pay the tax bill with interest when the error was found by Customs and indeed informed the tribunal that he had sold his house to raise the money. We consider that the VAT position was complicated by the lengthy process of tests and registration during which vehicles could not be on the road. We propose to reduce the penalties to nil.
6. The appeal is allowed.
7. Costs have not been sought and we make no direction as to costs.

ELSIE GILLILAND

CHAIRMAN
Release Date: 31 October 2007

MAN/07/0520