20595

Default Surcharge:  time for payment passed as Friday of week for payment was Good Friday.  Valiant efforts by Appellant to pay a proportion:  Appeal re proportion allowed.

EDINBURGH TRIBUNAL CENTRE

	AILSA CLEANING SERVICES LTD	Appellant(s)

	- and -

	THE COMMISSIONERS FOR 
	HER MAJESTY’S REVENUE & CUSTOMS	       Respondents

			Tribunal:	 (Chairman):  Mrs G Pritchard, BL., MBA., WS

Sitting in Edinburgh on Friday 15 February 2008

for the Appellant(s)	Mary McFarlane

for the Respondents	Russell Harrison

© CROWN COPYRIGHT 2008.

DECISION

This is an appeal against the imposition of a default surcharge in respect of the quarter 04/07 in the sum of £1694.54.  The Appellant was represented by Mary McFarlane.  Customs was represented by Russell Harrison.

From the evidence I found:

1.	The Appellant’s cheque for the 02/07 quarter was timeous but was rejected by the Appellant’s bank on 5.02.07.  The Appellant was expecting a large payment from one of her customers which would have been sufficient to cover the liability on 5.02.07 had it been received.  The outstanding VAT was £11,296.99.  The Appellant only had £7,000 available.
2.	On 5.02.07 Miss McFarlane knew what might happen and wished to avoid the consequences of another default surcharge.  She had registered for VAT some 6 years previously and had had a very good record until she expanded her business in 2005.  She then had some big customers who were slow payers.  She did not use a cash accounting system so issued tax invoices for payment.  As a result VAT became due before she was in funds.  She actually called on her biggest customer to try to get sufficient payment so her cheque would not bounce.  They did not pay until the following Tuesday.
3.	So concerned was she, she telephoned Customs and spoke to an officer who suggested she could send as much as possible by a CHAPS transfer the following day to avoid the default surcharge.  The 5th was a Thursday and the call was at 15.24, still inside banking hours but with very little time to make full arrangements as the Appellant was not a VAT trader normally making electronic payments.
4.	Miss McFarlane tried her bank who informed her about the credibility checks which would restrict payment to Customs bank, and also explaining the shortage of time as banking closed for CHAPS transfer at 15.30.  The following day was Good Friday a bank holiday as is Easter Monday so the payment was not possible until the following Tuesday 10 April 2007.
5.	Miss McFarlane advised Customs who advised in the circumstances the surcharge would probably be applied but she could appeal, which she did.

Decision
I find that the Appellant has a reasonable excuse for the non-payment of £7,000 of her VAT due on the 02/07 quarter.

Reasons
She tried valiantly to avoid the consequences of having insufficient funds.  She could simply have written a cheque for a proportion but tried to pay the whole sum.  Her efforts whilst trying to run her business deserve some recognition.

MRS G PRITCHARD, BL., MBA., WS

CHAIRMAN

RELEASE:   3 MARCH 2008

EDN/07/85