20386

Default Surcharge – Appellant aware of surcharge regime; made payment on account by agreement; status of Default Surcharge regime not reinforced by HMRC.  Appeal Allowed.

EDINBURGH TRIBUNAL CENTRE

	ALASDAIR MACQUEEN	Appellant

	- and -

	THE COMMISSIONERS FOR 
	HER MAJESTY’S REVENUE & CUSTOMS	       Respondents

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

Sitting in Edinburgh on Tuesday 25 September 2007

for the Appellant		HEARD ON PAPERS ONLY

for the Respondents	Mr Russell Harrison

© CROWN COPYRIGHT 2007.
DECISION

This is an appeal against the imposition of a default surcharge at 15% in respect of the quarter 12/06 amounting to £160.62 due on 31/01/07.

The Appellant made a written submission which was credible.  Mr Harrison represented HMRC.  There was a bundle of evidence numbered 1-106.  Where any page is referred to it will be deemed to be repeated here.

The Appellant’s submission was that he knew he was in a surcharge regime.  He did not want to incur surcharges.  He could not pay his VAT due to a large tax bill in respect of which he was requiring to re-mortgage his house.

The whole sum due on 31/01/07 was £3,070.86.  The Appellant had a long conversation with Mrs Walters an officer of HMRC in the Debt Management Unit (DMU).  Conversations with the DMU officers are not recorded.

He had outlined payment proposals of £2000 on 29/01/07 and the balance after the due date.  At p71 of the bundle of evidence, there is a record of a telephone call with an ‘A Geddes’ an officer of HMRC recording that the Appellant was in a position to pay this quarter due in full.  There is no record of his call with Mrs Walters.  He is very clear that he would not have paid in instalments if he had thought he would have a default surcharge applied.  He knew about the regime, he did not want more penalties.  It was not explained that even with an agreed payment on account arrangement the default surcharge would apply.

Mr Harrison explained that the Appellant could not have a recording of the conversation he requested as DMU conversations were not recorded.  Other conversations are.

The Default Surcharge regime applies irrespective of payment on account arrangements being agreed.

Decision
Appeal allowed.  No expenses are due to or by either party.

Reasons
HMRC apparently agreed payments on account without mentioning the Default Surcharge would apply on the outstanding balance.  Although the Appellant was well aware of the Default Surcharge regime he believed an agreed payment on account would mean that HMRC would accept the payments without penalty.

I consider that HMRC ought to have reminded the taxpayer that a payment on account acceptance would not relieve him of the Default Surcharge liability on the balance, so that the balance due to HMRC would not be the sum on the return, but the sum plus the Default Surcharge applied to any balance unpaid on the due date.

MRS G PRITCHARD, BL., MBA., WS

CHAIRMAN

RELEASE:  5 OCTOBER 2007

EDN/07/89