18129
Default surcharge – Reasonable excuse – Sudden illness of key employee provides an exercise for a short period, but not for 28 days of inaction – Appeal dismissed

LONDON TRIBUNAL CENTRE

	RAVENHEAD PROPERTY INVESTMENTS LTD	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	MR PAUL HEIM CMG  (Chairman)
						MRS S EDMONDSON FCA

Sitting in public in London on 8 January 2003

Mr P Audrain, Director, for the Appellant

Mr C Palmart, senior officer of the Solicitor’s  Office of HM Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2003

DECISION

1.	Ravenhead Property Investments Ltd appeals against a default surcharge in the sum of £2,499.15 imposed on it by the Commissioners on 2 September 2002 in respect of the late furnishing of the value added tax and payment of the tax shown thereon for the period running from 1 April 2002 to 30 June 2002.  The date on which the return and payment should have been received was 31 July 2002.  The return and payment were in fact furnished on 29 August 2002.

2.	At the hearing of this appeal the Appellant was represented by its director Mr P Audrain, and the Commissioners by Mr C Palmart, senior officer of HM Customs and Excise.

3.	The facts of the matter are not in dispute.  Mr Audrain explained them to the Tribunal in the following way.  He said that the Appellant company had been started three years ago, and had been run then on a less than full-time basis. A qualified accountants assistant was then appointed. This person had to be replaced. The replacement also left. The company’s accountants helped. However, not everything was done satisfactorily. The Appellant appointed a new accountant, who was well qualified and recommended. However work undone from previous years was never brought up-to-date. One day the accountant did not turn up and the Appellant was informed that she was suffering from a brain haemorrhage.  She was a young woman of 32 years of age, with a child, and her illness was extremely upsetting.  It was not possible to contact her at once. She made contact when she was getting better.  She was off work for six weeks. In that time the VAT return in issue should have been prepared. She did have a young assistant but the assistant was not able to take on everything. Mr Audrain said that the Appellant tended to overlook the fact that the return was due.  He agreed that the directors were responsible but said that there was a backlog of problems exacerbated by the sudden absence of the accountant.  She had now returned to work and had brought matters up-to-date.  

4.	It is clear from the documents presented to the Tribunal that the accountant fell ill on 3 July 2002, and returned to work on 12 August 2002.  While she was away it was uncertain when she would return.  

5.	The Commissioners say that the Appellants should have informed the relevant tax office of the difficulties. The Appellant had received the surcharge liability notice on the back of which it was clearly stated that if the taxpayer expect to have difficulties he should let the local VAT office know as soon as possible. The Commissioners further say that they would accept the sudden illness of a key member of staff as a reasonable excuse for a short period but here the Appellants had nearly a month to meet the problems created by the illness of their accountant.  Facing such a difficulty a taxpayer was at some stage required to make arrangements to deal with the problem. The Appellant in the present case had been registered for three years.  It had advice available.  It could have taken some steps to meet the problem or at least put it to their local tax office.   

6.	The facts of the matter are admitted.  There is no question that the Appellant faced an accumulation of problems dating back to the earlier period of their trading, and that regrettably their accountant fell ill unexpectedly, a matter clearly of gravity for her, and also distressing and worrying for her colleagues and employers.  

7.	Nevertheless the Tribunal thinks that faced with a difficulty even of such a distressing and unforeseen nature, it is necessary for a taxpayer to take some steps to face the problem and to try to comply with his obligations.  The directors were aware of their obligations and frankly admit that they could have done more.  That is also the Tribunal’s view. The Appellant had received an indication with the surcharge liability notice that in case of difficulty it was advisable to contact the local tax office, and that was something which in prudence they should have done.   

8.	With every sympathy for a taxpayer faced with the sudden illness of a key member of staff, the Tribunal does not think that the exoneration which such an event might give for a relatively short period can be allowed to extend to cover a default 28 days later.  This appeal must be dismissed.  

PAUL HEIM CMG
CHAIRMAN

RELEASED: 8 May 2003

LON/02/799