[2011] UKFTT 492 (TC)
TC01339
Appeal number
TC/2011/01112
Appeal
against VAT default surcharges – Appellant did not receive the surcharge
notices as they were sent to the wrong address – they were also addressed to
the wrong company as the Appellant had changed its name in 2008 and had so
informed HMRC- appeal allowed as a result of the surcharge notices not being
validly served
FIRST-TIER TRIBUNAL
TAX
DWS
ENVIRONMENTAL LTD Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL:
S.M.G.RADFORD (TRIBUNAL JUDGE)
DAVID
E.WILLIAMS CTA
Sitting in public at The Old
Bakery, Norwich NR1 3PL on 24 June 2011
Mr C and Mrs D Morris for the
Appellant
Mr B Robinson for the
Respondents
© CROWN COPYRIGHT
2011
DECISION
1. This
is an appeal against the VAT default surcharges imposed on the Appellant for
VAT periods 07/09, 10/09, 01/10, 04/10 and 07/10 for the late payment of VAT.
Background and Facts.
2. Mr
and Mrs Morris appeared for the Appellant whose shareholder and director, Ms
Susan Newell, was currently suffering from ill health. They explained that the
Appellant’s water coolers were on lease from their company Chevington Finance
and Leasing. Through that company they hold a fixed and floating charge over
the Appellant’s assets and from October 2010 have been signatories on its bank
account.
3. The
Appellant’s business is the supply and maintenance of water coolers to
customers’ premises.
4. In
June 2010 Mr and Mrs Morris stepped in to assist Ms Newell who was struggling
to cope and was suffering from stress. They felt that she had a viable business
and as the equipment belonged to their company it was in their interests to do
so.
5. The
Appellant changed its name from Direct Water Solutions Ltd to DWS Environmental
Ltd on 7 November 2008 and on 18 November 2008 the Appellant’s company
secretary wrote to inform HMRC and sent them a copy of the certificate which
confirmed this.
6. A
copy of the relevant letter and the certificate were produced in evidence to the
Tribunal.
7. On
5 August 2009 the Appellant moved and informed HMRC of their change of
address. A copy of the letter was produced to the Tribunal.
8. Mrs
Morris confirmed that the copies of the letters were taken from the office
files.
9. Despite
these letters HMRC did not activate the change of name or the change of address
and sent the surcharge notices addressed to Direct Water Solutions Ltd and to
the Appellant’s old address and as a result they were not received by the
Appellant.
10. Mr and Mrs
Morris confirmed that at the time they stepped in to help the Appellant both
they and Ms Newell were unaware of the problem until the bailiffs arrived as a
result of the non payment of the surcharges.
11. Mrs Morris said
that she had phoned HMRC repeatedly about the change of name and address which
she believed had finally been changed on HMRC’S files on 15 October 2010 as a result of the visit by the bailiffs.
12. However even as
late as 3 December 2010 and 7 January 2011 the Appellant received
correspondence from HMRC sent to the right address but using the Appellant’s
old name.
Legislation
13. Section 59 (4)
of the Value Added Tax Act 1994 (“VATA”) states:
Subject to
subsections (7) to (10) below, if a taxable person on whom a surcharge
liability notice has been served—
(a)is in
default in respect of a prescribed accounting period ending within the
surcharge period specified in (or extended by) that notice, and
(b)has outstanding VAT for that prescribed accounting
period,
he shall be liable to a surcharge equal to
whichever is the greater of the following, namely, the specified percentage of
his outstanding VAT for that prescribed accounting period and £30.
14. Section 98 of
VATA states
Any notice, notification, requirement or
demand to be served on, given to or made of any person for the purposes of this
Act may be served, given or made by sending it by post in a letter addressed to
that person or his VAT representative at the last or usual
residence or place of business of that person or representative.
Appellant’s submissions
15. Mr and Mrs
Morris submitted that from the moment they took over they had paid all the
bills which appeared to be outstanding.
16. As soon as the
bailiffs arrived they paid the outstanding VAT right away on 13 October 2010. They set up a direct debit on 14 February 2011 so that the problem would not arise again.
17. They submitted
that until then they and Ms Newell had been unaware of the surcharges as none
of the notices had been received. It appeared that the surcharge notices had
been sent to their old address although they submitted that HMRC must have had
the correct address for the bailiffs to be able to visit.
HMRC’s Submissions
18. Mr Robinson
submitted that the case hinged on the letters sent to HMRC to advise them of
the change of the Appellant’s name and the change of address.
19. He had never
before seen these letters until they were produced to the Tribunal.
20. He accepted
however that if these letters had been sent to HMRC then the notices had not
been validly served as apart from being sent to the wrong address they had been
addressed to the wrong company.
Findings
21. The Tribunal
found the Mr and Mrs Morris’s evidence to be sincere and truthful. There was no
reason to doubt that the letters had been duly sent to HMRC particularly as
even after Mrs Morris had phoned HMRC they were still addressing the Appellant
by the wrong name in January 2011.
22. Other
correspondence produced to the Tribunal showed that the Appellant had made
frequent attempts to correct the situation.
23. The Tribunal
found therefore that the surcharge notices had not been validly served in
accordance with VATA.
Decision
24. The appeal is
allowed and all of the default surcharges are hereby cancelled.
25. This document
contains full findings of fact and reasons for the decision. Any party
dissatisfied with this decision has a right to apply for permission to appeal
against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal)
(Tax Chamber) Rules 2009. The application must be received by this Tribunal
not later than 56 days after this decision is sent to that party. The parties
are referred to “Guidance to accompany a Decision from the First-tier Tribunal
(Tax Chamber)” which accompanies and forms part of this decision notice.
TRIBUNAL JUDGE
RELEASE DATE: 21 JULY 2011
