The Clean Car Company Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 04 March 1991 |
| Date | 04 March 1991 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following case was referred to in the decision:
DPP v CamplinUNK [1978] 2 All ER 168
Penalty - Serious misdeclaration - Overstatement of input tax - Appellant company overstated its entitlement to credit for input tax in its return for period ending 30 June instead of period that included July - Whether reasonable excuse - Finance Act 1985 section 14Finance Act 1985, sec. 14.
The issue was whether the appellant company had a reasonable excuse for claiming credit for input tax in the period before the invoice was received.
The appellant company owned two sites on which it carried on the business of cleaning and washing cars. The building of the second site had recently been finished at a cost of £250,000. The company's contract with the builder said that payment for the building work was to be by stage payments within 14 days of the receipt of each architect's certificate.
The second interim certificate was dated 29 June 1990 in the sum of £105,100 and received by the company on 3 July. No invoice had been received from the contractor but the managing director of the appellant company paid to the contractor on 6 July the amount shown on the certificate. The managing director worked out the amount of VAT chargeable and paid the total plus VAT to the contractors on 6 July. The actual invoice was received on 8 July. On 6 July the managing director completed the company's VAT return for the period to 30 June and included in that return £15,765 as input tax for which credit was claimed. Because the contractors were not in fact paid by 30 June, the supply on which input tax had been charged could not be treated as having taken place by the end of June (Value Added Tax (General) Regulations 1985, reg. 26). The tax on those supplies became chargeable on 2 July when the contractors issued the tax invoice. It followed from reg. 62(1) that the company should have claimed credit for the input tax in its return for the period that included July, and by claiming in the return for the period to the end of June the company had overstated its entitlement to credit for input tax for that period. A Customs officer noticed the error and the company was assessed to a penalty underFinance Act 1985 section 14 subsec-or-para (1)sec. 14(1) of £4,729, being 30 per cent of the overstatement of input tax.
The managing director ("P-H") accepted the facts, but submitted that he had a reasonable excuse for the mistake. In March his...
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