HMRC has been bowled out in its £100,000 VAT battle against the England and Wales Cricket Board (ECB), after a first-tier tribunal agreed that a surcharge liability notice (SLN) had not been received by the board.
In October 2015, HMRC upheld a VAT default surcharge dated 15 June for £106,602, which was then contested by the ECB on the basis that they had not received a SLN.
The ECB, which paid a VAT liability three days late under the ‘payment on account’ (POA) regime, argued that HMRC needed to provide a SLN in order to enforce a default surcharge, something which the ECB claims they didn’t receive.
Harvey Mannie, an ECB employee said in a witness statement that “he had no recollection of ever having received the 19 June 2014 SLN” which HMRC claimed to send.
The ECB rested its case on a precedent set by Customs and Excise Commissioners v Medway Draughting and Technical Services Ltd  STC 346, in which the VAT and duties tribunal ruled in the favour of the appellant, stating that HMRC did not send the SLN in time.
In terms of the ECB case, the judge ruled that “it is for HMRC to show that the SLN was properly addressed and posted pre-paid. If it does, then the SLN is treated as served at the point in time when it would have been received by the appellant in the ordinary course of post – unless the Appellant can prove otherwise.”
The tribunal found that the SLN was drafted and addressed correctly, but found it was not sent pre-paid.
Judge Aleksander Kamal Hossain therefore allowed the ECB’s appeal, stating: “Following the decision of the High Court in the Medway case, for a taxpayer to be liable to a default surcharge, it is essential that they have previously been served with a SLN. Given our findings that the appellant had not been served with an SLN by HMRC, 5 the surcharge under appeal cannot stand.”
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