K D Productions LTD v Revenue and Customs (VAT - PENALTIES : Default surcharge)

VAT default surcharge � appellant using cash accounting �late payment by clients- reasonable excuse for defaults? � no - appeal dismissed

The appellant company, K D Productions Ltd was represented by its director and owner, Mr Kingsley-Dobson. He gave oral evidence which HMRC had the opportunity to cross-examine and he helped with tribunal with its further questions. I found Mr Kingsley-Dobson to be an honest and credible witness of fact. The tribunal and parties also had access to a bundle of documents (in Mr Kingsley-Dobson�s case this was through viewing a scanned version of the bundle on his screen). The bundle included correspondence between the parties and various bank and cash-flow statements the appellant had sent in.

�(7) If a person who apart from this sub-section would be liable to a surcharge under sub-section (4) above satisfies the Commissioners or, on appeal, a Tribunal that in the case of a default which is material to the surcharge �

(a) the return or as the case may be, the VAT shown on the return was despatched at such a time and in such a manner that it was reasonable to expect that it would be received by the commissioners within the appropriate time limit, or

(b) there is a reasonable excuse for the return or VAT not having been so despatched then he shall not be liable to the surcharge and for the purposes of the preceding provisions of this section he shall be treated �as not having been in default in respect of the prescribed accounting period in question (and, accordingly, any surcharge liability notice the service of which depended on that default shall be deemed not to have been served)�