20898

Value Added Tax  -  Default surcharge  -  Typing error in inserting the figures in the amount to be paid in VAT in the on-line instruction to make payment  -  Appeal allowed

LONDON TRIBUNAL CENTRE

	PAUL ANTHONY HUTCHINSON	           Appellant

- and -

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

Tribunal: HOWARD M NOWLAN (Chairman)
				    MRS NORAH CLARKE (Member)

Sitting in public in Cardiff on 26 and 28 November 2008

Mrs. Hutchinson on behalf of the Appellant

Mrs. Crinnion of the Solicitor's Office of HMRC on behalf of the Respondents

© CROWN COPYRIGHT 2008

DECISION

1.	This was a default surcharge case in which a default surcharge of £1,200.00 was imposed on the Appellant, charged at the 15% rate. The Appellant had suffered a considerable number of surcharges, most being occasioned by the cash flow difficulties of having to pay most of the outlays of the business before customers paid their invoices. It appeared that there was a reasonable chance that the record of late payments would be reduced by changing over to cash accounting for VAT. None of this however had any bearing on the instant case because the late payment was not occasioned by the cash flow problems usually faced by the business. 

2.	The late payment in the present case was occasioned by a simple mistake on the part of the Appellant's wife who generally kept the records of the business and dealt with such matters as her husband's VAT returns and payments. Mrs. Hutchinson showed us the bank statements which demonstrated that when she sought to make payment of the VAT liability of £8,268.02, the business had adequate overdraft cover to ensure that the payment would be met in full, and adequate cover to ensure that later payments would also be met (because in fact the overdraft was progressively reducing after the payment of the VAT). The reason why the VAT was not paid in full by the due date was that Mrs. Hutchinson unfortunately omitted to type in the figure "8", preceding the rest of the amount payable, and she failed then to notice that she was only paying £268.02 of the VAT. When she next examined the business bank account on line she noticed the mistake that had been made and herself drew it to the attention of HMRC and rectified it immediately. 

3.	We were absolutely convinced that Mrs. Hutchinson was telling the truth when she described how she had mistakenly paid the wrong amount. We accept that it is no excuse for the Appellant to say that he had delegated the responsibility to make payment to someone else, but we consider that if the Appellant's own actions were reasonable, and the delegate herself had a reasonable excuse for the late payment of the VAT, then those facts can provide a reasonable excuse for the late payment.    Since Mrs. Hutchinson always dealt with the paperwork for the business, and the present mistake was a mistake, the nature of which anyone could make (probably only once) we considered that there was a reasonable excuse for the late payment. The innocence of the mistake was amply demonstrated by the obvious fact that a business that had suffered considerably from the default surcharge regime would hardly have delayed payment of the bulk of its VAT by just 11 days, and 9 days from the final cut off date for payment electronically, when such late payment would involve a penalty of £1,200 and the agreed overdraft ensured that the full payment would be met.

HOWARD M NOWLAN
CHAIRMAN
  RELEASED: 15 December 2008

LON/2008/1893