20599

Value Added Tax  -  Default surcharge  - Illness on the part of the Appellant -  Appeal allowed

LONDON TRIBUNAL CENTRE

	QUESTS FOR SOLUTIONS	           Appellant

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

				Tribunal:	HOWARD M NOWLAN (Chairman)
						ROBERTA S JOHNSON

Sitting in public in London on 20 February 2008

Nigel Watson, partner in the Appellant company, for the Appellant

Gloria Orimoloye of HMRC’s Solicitor’s Office, for the Respondents

© CROWN COPYRIGHT 2008

DECISION

1.    This was a case where the Appellant was three days late in paying its VAT electronically for the VAT period 07/07. The papers accompanying the Notice of Appeal focused principally on the fact that the preparation of the Appellant's VAT return had been out-sourced to a firm at the beginning of the relevant VAT period and that it was only on 31 July that the company responsible for the preparation of the return provided the relevant figures. The turnover in the period in question had also been unusually high so that the Appellant was faced with having to make a substantial payment, having had little time to file the return and make the payment. 

2.    At the hearing before us the case was put on a quite different basis in that Mr.  Watson explained that for a 2 to 3 year period he had been suffering from severe failure to sleep, which had left him extraordinarily tired during the day and experiencing the greatest difficulty in attending to detailed matters. It was for this reason that the consultants had been appointed to deal with the preparation of the VAT returns. Mr. Watson said that it was only at Christmas 2007 that he sought medical advice, and on being referred to a specialist, was given treatment that had transformed his life. He attributed his difficulties in grappling with the detail of attending to the VAT return to this condition. 

3.    Whilst this condition was one that did not obviously incapacitate the Appellant and thus clearly provide a reasonable excuse for the late payment of his VAT, we both accepted the honesty of the Appellant who gave evidence on oath, and accepted that in his case this particular complaint had been very severe indeed. We were shown medical evidence that seemed to suggest that the Appellant had been getting virtually no sleep during the night, and we accepted that he had thus found work (other than the most adrenalin-packed aspects of it) extremely difficult. We accepted that this had at least contributed to the Appellant's failure to appreciate the timing difference between making an electronic payment by BACS, as opposed to CHAPS, transfer, and that it had thus contributed to his failure to pay on time. It was also confirmed by HMRC's representative that this aspect of the case had not been known when the surcharge had been imposed, and that while she was unable to change her contention that the surcharge should be sustained, she shared some sympathy for the Appellant. 

4.    Our decision is that the Appellant did have a reasonable excuse for the late payment of the VAT for the relevant period, and that the surcharge should be eliminated.   We accordingly allow the appeal.

HOWARD M NOWLAN
CHAIRMAN

RELEASED: 4 March 2008

LON 2007/1817