19304

DEFAULT SURCHARGE – Reasonable excuse – Late return – Member of accountant’s staff unexpectedly absent – Whether reasonable excuse to rely on accountant’s failure – No – Appeal dismissed

LONDON TRIBUNAL CENTRE

	D L RICHES & C A MUNT	           Appellant
T/A BY-DESIGN 

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

				Tribunal:	STEPHEN OLIVER QC (Chairman)
						MRS R S JOHNSON

Sitting in public in London on 12 October 2005

The Appellants were unrepresented

Phillip Webb for the Respondents

© CROWN COPYRIGHT 2005

DECISION

1.	The Appellants, who are partners in a windows, doors and conservatories business, appeal against a default surcharge of £546.44 relating to the 07/04 period.  The return and the payment were due in on or by 31 August 2004.  They were actually received on 9 September 2004.

2.	Neither of the partners attended the hearing.  On 10 October D L Riches wrote to the tribunal stating that he was unable to attend due to a late business commitment.  The letter went on stating that he had known for some time that the hearing was coming up but he did not feel he could add to what he had already said in “his letter”.  On the basis of that letter we decided to go ahead with the hearing under rule 26 of the Value Added Tax Tribunals Rules.  This enables us to decide an appeal in the absence of a party.  It should be noted that the absent party has the right to apply to the tribunal, within 14 days, for a rehearing or for such relief as is just and reasonable in the circumstances.  If the Appellants do choose to make an application of that sort, one of them must attend in person to make it.  

3.	We now set out the grounds of appeal in full.  The appeal was actually lodged by D L Riches but he refers to the business entity as D L Riches and C A Munt trading as By-Design.  We quote:

“I did not receive my VAT return from the accountant until after Tuesday 31 August.  He has never been this late with my return in ten years.  The reason it was late (see letter attached) was the lady who worked for him had to take unexpected time off in the latter part of August to look after her sick mother.  Friday 27 August : my business which is in the High Street closed for the Bank holiday.  On Thursday 26 August we received a letter from my 14 year old son’s school saying he did not have to go back next week but not for another two weeks as the builders had not finished his new school.  So during that weekend we took the opportunity to see if we could book a holiday.  We managed to book Greece from 30 August-6 September, that is my family.  On my return 7 September I had a funeral to attend in Norfolk and on 8 September I returned to my business premises, found my VAT return and sent it off that day.  Note – C A Munt is my partner and wife so she was on holiday with me.”

The letter from the accountant referred to in the Notice of Appeal states as follows:

“I can confirm that your VAT Return was completed and delivered by hand to your office on 2 September because the lady employed by this office who was preparing the return was away for two days on 18 and 19 August attending to her elderly mother who had a fall.”

4.	There is some confusion about the dates referred to in the Notice of Appeal.  It appears, however, that the Appellants knew, sometime on Thursday 26 August, that they had the opportunity of arranging a holiday in Greece.  It seems to us also that, sometime on 26 August, they were in a position to take steps to ensure that their VAT return for the 07/04 period was signed and despatched to the Customs.  The fact that the return was still with the accountant does not, we think, excuse the Appellants.  In the first place they could, as noted above, have arranged for the return and payment to be transmitted to the Customs before the Bank holiday weekend started.  In the second place, the excuse put forward in the Notice of Appeal explains the default on the basis of the accountant’s failure to perform the relevant task of filling in the return and passing it to the Appellants for signature.  VAT Act 1994 section 71(1)(a) excludes from the class of “reasonable excuses” cases where reliance has been placed on another person to perform a task; it says that “neither the fact of that reliance nor any dilatoriness or inaccuracy on the part of the person relied upon is a reasonable excuse.”

5.	For those reasons we cannot accept that the Appellants had a reasonable excuse for the late submission of the 07/04 return.  The statute imposing the default surcharge regime makes no provision for mitigation, notwithstanding the apparent harshness of the penalty.  For that reason we cannot do other than dismiss the appeal.

6.	We should mention one other thing which is the information contained in the letter from the accountant. That has been set out in full above.  It states that the bookkeeper working for the accountant was away on 18 and 19 August.  That still left several days for the preparation and submission of the 07/04 return.  

7.	Appeal dismissed.

STEPHEN OLIVER QC
CHAIRMAN

RELEASED: 24 October 2005

LON/05/0003