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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Thornpark Maintenance Services Ltd v Revenue & Customs [2007] UKVAT V20263 (20 July 2007) URL: http://www.bailii.org/uk/cases/UKVAT/2007/V20263.html Cite as: [2007] UKVAT V20263

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20263

Assessment of interest — amount of assessments accepted — appeal on imposition of interest on the assessed amount — whether "reasonable excuse" available — discretion of Customs and power of tribunal considered in interest cases — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

THORNPARK MAINTENANCE SERVICES LTD Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Elsie Gilliland (Chairman)

Marilyn Crompton

Sitting in public in Manchester on 15 May 2007

Malcolm Vincent, a director, for the Appellant

Stefan Lewinski, counsel, instructed by the Solicitor and General Counsel for HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2007

DECISION

1. This is an appeal by Thornpark Maintenance Services Ltd, a shop fitting business (the Appellant), against two decisions to assess; the first for the period 07/04 and the second for the period 10/04 to 01/05. The total claimed on the assessments as per the statement of account calculated as at 24 July 2006 was tax of £31178.02 with interest charged thereon of £4203.49 making a total of £35381.51.
2. The Appellant's case was presented by Mr. Vincent a director of the Appellant. It became apparent during the course of the hearing that the appeal was not against the sums assessed but rather the imposition of interest on top which Mr. Vincent claimed was a penalty.
3. He referred to a dispute within the Appellant's company management which had led to High Court action. He stated that Customs were aware of this. There was a continuing dispute between the two directors and two shareholders. He attributed the Appellant's problems with VAT returns and VAT accounting over a period of time to the actions of a then director. Mr Vincent claimed that during the time that he (Mr Vincent) had financial control of the Appellant, VAT returns were correctly submitted on time and paid.
4. His submission was that whilst the VAT assessed as due had to be paid as properly incurred as the Appellant was trading at that time interest should not be charged as the effect was merely to penalise the Appellant when the fault lay with a previous director against whom Customs had taken no action. He drew the tribunal's attention in support to a decision that of Vane Ltd (19786) discussed in a section in the December 2006 edition of accountancy magazine. It was said that a tribunal held that a malicious act on the part of an employee intended to disrupt the accounting and tax paying functions of a business fell outside the provision referring to reliance on the part of the taxpayer on another person and thus was capable of constituting a reasonable excuse.
5. In the case before us the assessments were raised under s.73 of the Value Added Tax Act 1994 ("the Act") on the basis of incorrect and incomplete VAT returns. The relevant section in the Act on the imposition of interest charges on VAT recovered or recoverable is section 74. In s.76(1) it is provided that Customs may assess the amount due by way of interest and notify it to the person concerned. By the use of the word "may" a discretion is allowed to Customs but this discretion is generally exercised only by waiving interest where no tax has been lost or its collection delayed as a result of the default or by waiving it on voluntary disclosure when the net amount of the error is a specified amount or less. The approach taken by Customs is set out in detail in Notice 700/43/03 (and see De Voil Indirect Tax Service paragraph V5.364.) That however does not apply in the instant case as there has been delay in the collection of the tax.
6. The Appellant has the right to appeal under s.83(q) of the Act against the amount of the interest assessed. Accordingly we have jurisdiction to hear the appeal. However no power is conferred on the tribunal to vary an amount assessed by way of interest except to reduce it to the amount which is appropriate in accordance with the legislation (s.84(6) of the Act).
7. From the evidence presented to us it appears to us that during the period that the director to whom Mr. Vincent referred was dealing with financial matters that person was a director and a duly authorised officer of the Appellant. Further that there was `a reasonable excuse` is not a factor in claims by Customs for the payment of interest by the taxpayer but applies to penalties which are separate and distinct from interest in the Act. So far as the case of Vane Ltd is concerned no full report was made available to us and there is no indication that the imposition of interest was an issue mentioned.
8. We dismiss the appeal.
9. Customs have not sought costs and we make no direction as to costs.

ELSIE GILLILAND

CHAIRMAN
Release Date: 20 July 2007

MAN/06/ 0704