20733

Value Added Tax – Default Surcharge – Cheque wrongly dated – Genuine mistake – No reasonable excuse – Appeal dismissed

LONDON TRIBUNAL CENTRE

	MAGNUMCRAFT TECHNOLOGY LTD	           Appellant

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

				Tribunal:	MISS J C GORT (Chairman)
						MR M M HOSSAIN FCA FCIB

Sitting in public in London on 2 April 2008

No appearance on behalf of the Appellant

Miss G Orimoloye, Advocate, for the Respondents

© CROWN COPYRIGHT 2008

DECISION

1.	This is an appeal against a default surcharge in the sum of £447.55 in respect of the period 01/07.  

2.	There was no evidence as to the nature of the Appellant’s business.  It had been incurring surcharges since October 2003.  By 01/07 the surcharge had been at the 15% level continually since 01/05.  

3.	The Appellant company operates from Reading in Berkshire, but no one was able to attend at the date of the hearing.  The matter therefore proceeded in the absence of the Appellant under the provision of rule 26(2) of the Value Added Tax Tribunals Rules 1986. A lengthy letter dated 29 March 2008 was sent to the Tribunal by Mr Rohit Mayor, a director of the Appellant company. 

4.	The default in question was incurred because, although a cheque and the return were sent and arrived on 1 March 2007, the due date being 28 February 2007, the cheque was dated 27 February 2006, rather than 2007.  It was signed by Mrs Seema Mayor, who is also a director of the Appellant company.  

5.	In the letter dated 29 March 2008 sent by Mr Mayor it is said inter alia that the wrong dating of the cheque was a genuine error, as the company did not issue many cheques and it was the first cheque which had been issued since the beginning of 2007.  Mr Mayor explained at some length various matters relating to previous defaults for which he accepted responsibility. The company had changed its procedure since the earlier run of defaults, and it was Mrs Mayor rather than Mr Mayor who was now responsible for submitting the returns.  He also informed us that he and his wife had three children under the age of 6, and for this reason she was unable to attend the Tribunal, whereas he was unable to attend because of the work pressure of running a small company.

6.	The Commissioners accepted that a genuine mistake had been made, but produced a bundle of some five earlier tribunal decisions where Appellants had made innocent errors in submitting the tax and their returns. In particular in the case of Eglington DIY Ltd (Decision No.9858), a decision of the Belfast tribunal, the cheque had similarly been dated with the previous year’s date.  In that case the tribunal took account of the fact that the cheque related to the month of March, by which time it would be expected that a taxpayer would be well acquainted with the new year’s date.  It was said that that appellant should have taken more care in preparing the cheque.  The Commissioners also relied on their Notice 700/50 which states that:

“Genuine mistakes, honesty and acting in good faith are not accepted as reasonable excuses for surcharge purposes.”

7.	Whilst we have reservations about the wording of Notice 700/50, the circumstances which give rise to the genuine mistake being matters which this Tribunal would be prepared to take into account when considering whether or not a default surcharge should be upheld, we have not heard any evidence as to the circumstances which gave rise to this mistake. It is unfortunate that neither Mr nor Mrs Mayor were able to attend the Tribunal to give us some idea of what their circumstances were at the time. In all the circumstances, we were not prepared to diverge from findings of all the other tribunals made in similar circumstances, and we announced at the hearing of the appeal that we dismissed the appeal.

8.	There is no order for costs.

MISS J C GORT
CHAIRMAN

RELEASED: 4 July 2008

LON 2007/0792