The Commissioners for HMRC v Sintra Global, Inc & Anor [2025] EWCA Civ 1661

“50. In outline, alcohol diversion fraud is used to evade excise duty and VAT through abuse of the Excise Movement and Control System (“EMCS”), which permits authorised warehouse keepers to move excise goods from warehouse to warehouse within the EU on behalf of account holders, in duty suspense. Any movement requires the generation of an Administrative Reference Code (“ARC”) within the EMCS, which must travel with the goods. The system has operated in electronic form since January 2011. An ARC number will typically last for a few days, and expires when the load is recorded on the system by the receiving warehouse as having been being delivered. 51. Inward diversion fraud, which is the type of fraud potentially relevant in this case, operates as follows. Alcohol originating in the UK is supplied under duty suspension to tax warehouses on the near continent, principally in France, the Netherlands and Belgium (what follows uses the example of France). Once in the tax warehouse they will usually change hands a number of times and will often be divided up before being reconstituted. A supply chain is set up with a purported end customer based in France. Some of the goods will be consigned back to the UK in duty suspense using an ARC number. This is the “cover load”

“(a) after the excise duty point for any goods which are chargeable with a duty of excise, P acquires possession of the goods or is concerned in carrying, removing, depositing, keeping or otherwise dealing with the goods, and (b) at the time when P acquires possession of the goods or is so concerned, a payment of duty on the goods is outstanding and has not been deferred.”

“(1) Where a penalty under any of paragraphs 1, 2, 3(1) and 4 is payable by a company for a deliberate act or failure which was attributable to an officer of the company, the officer is liable to pay such portion of the penalty (which may be 100%) as HMRC may specify by written notice to the officer. (2) Sub-paragraph (1) does not allow HMRC to recover more than 100% of a penalty. …”

“In contrast to the general rule for tax assessments, it has also long been accepted that HMRC bears the burden of proving that a person is liable to a penalty (see e.g. King v Walden [2001] STC 822 at [71] and Massey v HMRC [2016] STC at [58]). In penalty proceedings, which are punitive and do not concern liability to tax, and which engage Article 6 ECHR (right to a fair trial), the normal common law on burden of proof applies, i.e. that the person who makes the allegation must prove it. It is therefore for HMRC to prove the default which is the trigger for the penalty.”

“Accordingly, in general terms, given the nature of these appeals, the burden of proof falls on HMRC to establish the allegations before the Tribunal and the liability to penalties.”

“Finally, we would adopt the following observation of Mr Webster and Mr Gurney from their closing written submissions on behalf [of]the appellants that: ‘… there can be no criticism of the fact that the Respondents decided to investigate Mr Malde, given his role in the formation of the offshore entities and their bank accounts. They generated suspicion, and that suspicion was amplified by Mr Malde’s reluctance to volunteer information (born, as it was, out of distrust of HMRC resulting from previous problems with them). The problem is that much of the above demonstrates – and clearly demonstrates, in our submission – that suspicion generated a fixed view as to the involvement of Mr Malde and a determination to make him pay which blinded the officers to the defects in their analysis. A fixed view was arrived at, despite the difficulties with the evidence, and has been persisted with from relatively early in the investigation.’ To this we would add that had HMRC, and Mr Foster in particular, taken a less myopic approach to this case, particularly with regard to Mr Malde, from the commencement of their investigations we may well have reached entirely different conclusions.”

“(1) the FTT erred in law when it concluded ‘in general terms’ that the burden of proof fell on HMRC to establish the allegations before the tribunal and the liabilities to penalties (FTT [593]-[596]); (2) the FTT erred in law in its approach to the issues and evidence by compartmentalizing factors rather than examining the totality of the evidence; (3) the FTT’s conclusion (at FTT [643]) that Adrena ‘supplied’ the alcohol in the UK (and that Global did not) was demonstrably inconsistent with the underlying evidence; (4) the FTT erred in law in concluding that there was a breach of the “best of their judgment” requirement in section 73 VATA (in relation to the liability of SA, which underlies the civil evasion penalty); (5) in the alternative to (4), even if there had been a breach of the “best of their judgment” requirement in relation to some elements of the assessment, it was an error of law to set aside the whole assessment rather than correcting the amount to a fair figure (FTT [662]-[663]); and (6) the FTT failed to give any or adequate reasons with respect to a number of key matters set out in the application.”

“There is no problem so far as concerns the appeal against the VAT assessment. The position on an appeal against a ‘best of judgment’ assessment is well−established. The burden lies on the taxpayer to establish the correct amount of tax due … It should be noted that this burden of proof does not change merely because allegations of fraud may be involved (see e.g. Brady (Inspector of Taxes) v Group Lotus Car Companies PLC [1987] STC 635 at 642 … per Mustill LJ).”

“89. We regard all these cases (Brady, Ingenious, Awards together with Khan) as supportive of our view. We accept that none of them directly addresses the question of whether HMRC assumes the burden of proof in relation to the essential elements of the tax liability in a case where fraud or dishonesty is not an essential element, but HMRC pleads fraud or dishonesty. However, in our view, the burden does not change in such cases; the burden remains on the taxpayer to show that the closure notice is wrong and to establish the correct amount of tax. If for any reason, HMRC plead fraud or dishonesty in such cases – for example, because HMRC are seeking such a finding from the court or tribunal because of the part that it might play in future penalty proceedings – HMRC should plead their case with appropriate particularity, and prove it. However, that does not reverse the burden of proof in relation to the essential elements of the underlying assessment. 90. For these reasons, we do not agree with the FTT’s broad conclusion or with Mr Webster KC’s general principle.”

“112. Having reviewed the authorities, in our view, the key cases (principally King v Walden and Euro Wines) are clear that the question of the scope of the burden of proof in penalty appeals must be determined by reference to the application of the presumption of innocence in Article 6(2) ECHR. On that basis, the burden must fall on HMRC in penalty appeals unless an exception to the presumption can be justified. Whether or not an exception can be justified will depend upon all the facts and circumstances of the case. A penalty appeal in which a penalty is challenged on the basis that the underlying assessment is wrong – once questions of estoppel or abuse of process have been addressed – remains a penalty appeal. As such, and as a general rule, the principle that the burden is upon HMRC in penalty appeals includes a penalty appeal of this kind; that is to say a penalty appeal where the challenge is made on the basis that the underlying assessment is wrong. 113. As we have mentioned above, it is arguable that Carnwath LJ’s comments regarding the burden of proof in his judgment in Khan are strictly obiter. However, they are approved by Henderson LJ in Awards (Awards [37]). In any event, we do not regard our conclusion as inconsistent with Carnwath LJ’s judgment in Khan. In our view, his judgment falls within the exception. The relevant statute in Khan – section 60(7) VATA – defined the matters that were for HMRC to prove on any appeal. The clear implication was that the burden fell upon the taxpayer in relation to other matters. Carnwath LJ considered the implications of Article 6(2) ECHR and decided that they were adequately addressed. 114. As regards the decision of the Upper Tribunal in Zaman, which falls within the same statutory context as the appeals against the PLNs in this case, for the reasons that we have given, in our view the decision may be regarded as per incuriam given that there is no reference in the decision to the leading cases on penalty appeals or to Article 6(2) ECHR. In any event, we respectfully disagree with the conclusion in that case. We acknowledge that, although a decision of the Upper Tribunal is not binding on a later Upper Tribunal, as a tribunal of coordinate jurisdiction we should normally follow the decision of the earlier tribunal unless we are satisfied that the earlier decision is wrong (see Gilchrist v HMRC [2014] UKUT 169 (TCC) at [94]). However, on this issue, we are satisfied that the decision in Zaman is wrong, and so we will not follow it.”

“All the issues before the FTT were for HMRC to prove apart from the quantum of the underlying liability on which the penalty was based”

“125. At this point, we should note that we have treated Global’s appeal against the decision of HMRC that it was required to register for VAT as subsumed within the appeal against the registration penalty. Although at first sight, it would appear that this is a separate appeal (and not a penalty appeal), in this case, the only practical manifestation of the decision that Global was required to be registered for VAT purposes is the registration penalty. The issues that are relevant – in particular, whether Global made taxable supplies in the UK in excess of the VAT threshold – are the same as those which form the basis of the registration penalty. In our view, any decision on the imposition of the burden of proof in relation to the decision that Global was required to be registered must therefore follow the decision on the burden of proof in relation to the registration penalty.”

“What the FTT was not entitled to do, given its duty to consider the totality of the evidence relevant to the place of supply, was to place the issue of control into a separate compartment, which was left unconsidered when the FTT came to consider the place of supply issue. The place of supply issue was not suitable to be treated as, in effect, a preliminary issue. There was no clear separation between the evidence relevant to place of supply issue and the evidence relevant to the issue of control. The evidence in relation to each issue, at the least, was capable of overlap.”

“the UT erred in law when it determined, save for quantum, that the burden of proof fell on HMRC with respect to ‘all relevant aspects of the penalty appeals’. HMRC submits that where a taxpayer challenges a Schedule 24 or 41 penalty assessment on the grounds that the underlying tax liability is wrong, save for the exceptions at [11] of HMRC’s skeleton argument, the burden of proof remains on the taxpayer with respect to the underlying tax liability component of the penalty.”

“(1) In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. … (2) Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. (3) Everyone charged with a criminal offence has the following minimum rights: …”

“In the tax field, developments which might have occurred in democratic societies do not, however, affect the fundamental nature of the obligation on individuals or companies to pay tax. In comparison with the position when the convention was adopted, those developments have not entailed a further intervention by the state into the 'civil' sphere of the individual's life. The court considers that tax matters still form part of the hard core of public authority prerogatives, with the public nature of the relationship between the taxpayer and the tax authority remaining predominant. Bearing in mind that the convention and its protocols must be interpreted as a whole, the court also observes that art 1 of Protocol 1, which concerns the protection of property, reserves the right of states to enact such laws as they deem necessary for the purpose of securing the payment of taxes (see, mutatis mutandis, Gasus Dosier-und Fördertechnik GmbH v Netherlands (1995) 20 EHRR 403 at 434, para 60). Although the court does not attach decisive importance to that factor, it does take it into account. It considers that tax disputes fall outside the scope of civil rights and obligations, despite the pecuniary effects which they necessarily produce for the taxpayer.”

“… The court notes that the penalty proceedings in the present case were classified as civil, rather than criminal, in domestic law. However, as in Bendenoun v France (1994) 18 EHRR 54 at 74–76, paras 44–48, the penalty was intended as a punishment to deter re-offending, its purpose was both deterrent and punitive and the penalty itself was substantial. These factors taken together indicate that the penalty imposed in the present case was a 'criminal charge' within the meaning of art 6(1). As to whether the assessments themselves should also be seen as 'criminal charges' for the purpose of the art 6 guarantees, the applicants argue that since the penalty procedures rely on the assessments for their validity, it would be wrong not to look at the proceedings as a whole. The court accepts that it is not possible, given the various matters which were being determined by the tribunal, to separate those parts of the proceedings which determined a 'criminal charge' from those parts which did not. It will consider the proceedings to the extent to which they determined a 'criminal charge' against the applicants, although that consideration will necessarily involve the 'pure' tax assessments to a certain extent.”

“The true legal position is that the ultimate (so-called “legal”) burden at all times lay on the Revenue.”

“64. The Court has consistently held that, generally, tax disputes fall outside the scope of ‘civil rights and obligations’ under Art.6 of the Convention, despite the pecuniary effects which they necessarily produce for the taxpayer. The facts of the present case do not give reason to review that conclusion. 65. Having regard to the fact that tax surcharges were imposed on the applicant, the question arises whether the proceedings in the present case instead involved a determination of a ‘criminal charge’. The Court reiterates that the concept of ‘criminal charge’ within the meaning of Art.6 is an autonomous one. In determining whether an offence qualifies as ‘criminal’, three criteria are to be applied: the legal classification of the offence in domestic law, the nature of the offence and the nature and degree of severity of the possible penalty.”

“It is further to be noted that the relevant domestic proceedings have concerned both taxes and surcharges. In the light of its conclusion that Art. 6 does not apply to the dispute over the tax itself, the Court will consider the proceedings to the extent to which they determined a ‘criminal charge’ against the applicant, although that consideration will necessarily involve the ‘pure’ tax assessments to a certain extent.”

“Furthermore, the court is not persuaded that the nature of tax surcharge proceedings is such that they fall, or should fall, outside the protection of art 6. Arguments to that effect have also failed in the context of prison disciplinary and minor traffic offences (see, variously, Ezeh and Connors and Öztürk, cited above). While there is no doubt as to the importance of tax to the effective functioning of the state, the court is not convinced that removing procedural safeguards in the imposition of punitive penalties in that sphere is necessary to maintain the efficacy of the fiscal system or indeed can be regarded as consonant with the spirit and purpose of the Convention. In this case the court will therefore apply the Engel criteria as identified above.”

“My Lords, sections 5(2) of the Road Traffic Act 1988 and 11(2) of the Terrorism Act 2000, conventionally interpreted, impose a legal or persuasive burden on a defendant in criminal proceedings to prove the matter respectively specified in those subsections if he is to be exonerated from liability on the grounds there provided. That means that he must, to be exonerated, establish those matters on the balance of probabilities. If he fails to discharge that burden he will be convicted. In this appeal by the Director of Public Prosecutions and this reference by the Attorney General these reverse burdens (‘reverse’ because the burden is placed on the defendant and not, as ordinarily in criminal proceedings, on the prosecutor) are challenged as incompatible with the presumption of innocence guaranteed by article 6(2) of the European Convention for the Protection of Human Rights and Fundamental Freedoms (1953). Thus the first question for consideration in each case is whether the provision in question does, unjustifiably, infringe the presumption of innocence. If it does the further question arises whether the provision can and should be read down in accordance with the courts’ interpretative obligation under section 3 of the Human Rights Act 1998 so as to impose an evidential and not a legal burden on the defendant. An evidential burden is not a burden of proof. It is a burden of raising, on the evidence in the case, an issue as to the matter in question fit for consideration by the tribunal of fact. If an issue is properly raised, it is for the prosecutor to prove, beyond reasonable doubt, that that ground of exoneration does not avail the defendant.”

“The right to a fair trial has long been recognised in England and Wales, although the conditions necessary to achieve fairness have evolved, in some way quite radically, over the years, and continue to evolve. The presumption of innocence has also been recognised since at latest the early 19th century, although (as shown by the preceding account of our domestic law) the presumption has not been uniformly treated by Parliament as absolute and unqualified. There can be no doubt that the underlying rationale of the presumption in domestic law and in the Convention is an essentially simple one; that it is repugnant to ordinary notions of fairness for a prosecutor to accuse a defendant of crime and for the defendant to be then required to disprove the accusation on pain of conviction and punishment if he fails to do so. The closer a legislative provision approaches to that situation, the more objectionable it is likely to be. To ascertain the scope of the presumption under the Convention, domestic courts must have regard to the Strasbourg case law. It has there been repeatedly recognised that the presumption of innocence is one of the elements of the fair criminal trial required by article 6(1): see for example, Bernard v France (1998) 30 EHRR 808, para 37.”

“From this body of authority certain principles may be derived. The overriding concern is that a trial should be fair, and the presumption of innocence is a fundamental right directed to that end. The Convention does not outlaw presumptions of fact or law but requires that these should be kept within reasonable limits and should not be arbitrary. It is open to states to define the constituent elements of a criminal offence, excluding the requirement of mens rea. But the substance and effect of any presumption adverse to a defendant must be examined, and must be reasonable. Relevant to any judgment on reasonableness or proportionality will be the opportunity given to the defendant to rebut the presumption, maintenance of the rights of the defence, flexibility in application of the presumption, retention by the court of a power to assess the evidence, the importance of what is at stake and the difficulty which a prosecutor may face in the absence of a presumption. Security concerns do not absolve member states from their duty to observe basic standards of fairness. The justifiability of any infringement of the presumption of innocence cannot be resolved by any rule of thumb, but on examination of all the facts and circumstances of the particular provision as applied in the particular case.”

“Where in any proceedings relating to customs or excise any question arises … as to whether or not – (a) any duty has been paid or secured in respect of any goods; … the burden of proof shall lie upon the other party to the proceedings.”

“70 … in a case such as this, where the tribunal is also considering the quantum of the assessment to which the penalty is referable, the effect of that burden is likely to be academic.”

“[68] In spite of the common ground, which thus emerges from the judgment below and the submissions of the parties, I find some difficulty with this analysis. In view of the potential importance of this issue for other cases, I am reluctant to allow this judgment to rest simply on concessions, although I acknowledge that understandably the issues may not have been fully explored in argument. I will summarise my own understanding of the principles derived from the relevant statutory provisions and case law. [69] There is no problem so far as concerns the appeal against the VAT assessment. The position on an appeal against a 'best of judgment' assessment is well-established. The burden lies on the taxpayer to establish the correct amount of tax due: 'The element of guess-work and the almost unavoidable inaccuracy in a properly made best of judgment assessment, as the cases have established, do not serve to displace the validity of the assessments, which are prima facie right and remain right until the taxpayer shows that they are wrong and also shows positively what corrections should be made in order to make the assessments right or more nearly right.' (See Bi-Flex Caribbean Ltd v The Board of Inland Revenue (1990) 63 TC 515 at 522-523 per Lord Lowry.) That was confirmed by this court, after a detailed review of the authorities, in Customs and Excise Comrs v Pegasus Birds Ltd [2004] EWCA Civ 1015, [2004] STC 1509. We also cautioned (see [2004] STC 1509 at [38]) against allowing such an appeal routinely to become an investigation of the bona fides or rationality of the 'best of judgment' assessment made by Customs: 'Evidence to the tribunal [38] … (i) The tribunal should remember that its primary task is to find the correct amount of tax, so far as possible on the material properly available to it, the burden resting on the taxpayer. In all but very exceptional cases, that should be the focus of the hearing, and the tribunal should not allow it to be diverted into an attack on the Commissioners' exercise of judgment at the time of the assessment …' It should be noted that this burden of proof does not change merely because allegations of fraud may be involved (see e.g. Brady (Inspector of Taxes) v Group Lotus Car Companies plc [1987] STC 635 at 524, [1987] 3 All ER 1050 at 1057–1058 per Mustill LJ). [70] The other rights of appeal under s 83 of the 1994 Act have not been given such detailed examination by the courts. However, the general principle, in my view, is that, where a statute gives a right of appeal against enforcement action taken by a public authority, the burden of establishing the grounds of appeal lies on the person appealing. [71] That principle is well-established in other statutory contexts, particularly where the relevant facts are peculiarly within the knowledge of the person appealing. For example, a local planning authority may serve an enforcement notice if it 'appears' that there has been a breach of planning control. The owner can appeal against the notice on various grounds, which may, for example, include a denial of the acts complained of, or a claim that permission is not required. It has long been clear law that the burden of proof rests on the appellant. That was confirmed recently in this court in Hill v Secretary of State for Transport, Local Government and the Regions [2003] EWCA Civ 1904, [2003] All ER (D) 339 (Nov). Buxton LJ said (at [43]–[44]): ‘[43] The appellant accepted that there is a longstanding decision in planning law, Nelsovil Ltd v Minister of Housing and Local Government [1962] 1 WLR 404, [1962] 1 All ER 423, which has been generally regarded as placing the burden of proof on the appellant in an enforcement notice appeal. That view was developed in the leading judgment of Widgery J and pungently summarised by Slade J at page 409 of the report: “It is a novel proposition to me that an appellant does not have to prove his case.” [44] … The general principle that the appellant must prove his case seems to be unassailable …’ [72] It is true that both Nelsovil and Hill were planning cases, but the statements in the former were expressed quite generally. There may of course be something in the nature of the appeal, or the statutory context, which requires a different approach. For example, under the jurisdiction of the Transport Tribunal, it was held that, whereas on appeal against refusal of a licence the burden lay on the appellant, that was reversed on an appeal against revocation of a licence (see Traffic Comr v Muck It Ltd (Secretary of State for Transport, intervening) [2005] EWCA Civ 1124, (2005) The Times, 13 October). That decision turned on the construction of the particular regulations and the European Directive on which they were based. [73] The ordinary presumption, therefore, is that it is for the appellant to prove his case. That approach seems to me to be the correct starting-point in relation to the other categories of appeals with which we are concerned under s 83 of the 1994 Act, including the appeal against a civil penalty. The burden rests with the appellant except where the statute has expressly or impliedly provided otherwise. Thus, the burden of proof clearly rests on Customs to prove intention to evade VAT and dishonesty. In addition, in most cases proof of intention to evade is likely to depend partly on proof of the fact of evasion, and for that purpose Customs will need to satisfy at least the tribunal that the threshold has been exceeded. But, as to the precise calculation of the amount of tax due, in my view, the burden rests on the appellant for all purposes. [74] This view is reinforced by a number of considerations: (i) it is the appellant who knows, or ought to know, the true facts; (ii) s 60(7) makes express provision placing the burden on Customs in relation to specified matters. This suggests that the draftsman saw it as an exception to the ordinary rule, and seems inconsistent with an implied burden on Customs in respect of other matters; (iii) the distinction is also readily defensible as a matter of principle. Mr Young relied on 'the presumption of innocence' under art 6 of the Convention, but he was unable to refer us to any directly relevant authority. The presumption clearly justifies placing the burden of proof on Customs in respect of tax evasion and dishonesty; but once that burden has been satisfied, a different approach may properly be applied (compare R v Benjafield [2002] UKHL 2, R v Rezvi [2002] UKHL 1 (on appeal from R v Benjafield, R v Leal, R v Rezvi, R v Milford) [2003] 1AC 1099, [2002] 1 All ER 815, in relation to confiscation orders in criminal proceedings); (iv) in relation to the calculation of tax due the subject-matter of the assessment and penalty appeals is identical. This link is given specific recognition by s 76(5) (allowing combination in one assessment). It would be surprising if the Act required different rules to be applied in each case; (v) s 73(9) provides that the assessed amount, subject to any appeal, is 'deemed to be an amount of VAT due …'. In a case where either there was no appeal against the assessment, or the penalty proceedings followed the conclusion of any such appeal, this provision would appear to preclude any attempt to reopen the assessment for the purpose of assessing the penalty. The subsection does not apply directly where, as here, the penalty appeal is combined with an appeal against the assessment, and the assessment has not therefore become final, but it indicates another link between the two procedures. (I do not see the provision as necessarily confined to enforcement, as Mr Young argues. Nor in the present context do I need to spend time on his argument that this interpretation could cause unfairness in proceedings against a third party under s 61, although I note that under that provision there appears to be a general power to mitigate the penalty.); (vi) to reverse the burden of proof would make the penalty regime unworkable in many cases. In a case such as the present, a 'best of judgment' assessment is needed precisely because the potential taxpayer has failed to keep proper records, so that positive proof in the sense required in the ordinary civil courts is not possible. The assessment may be no more than an exercise in informed guesswork. Indeed to put the burden on Customs would tend to favour those who have kept no records at all, as against those who have kept records, which are merely inadequate, but may be enough to give rise to an inference on the balance of probabilities.”

“There was ample material to support a prima facie case that there had been evasion of tax, and that this had been intentional and dishonest. In the absence of evidence from Mr Khan to the contrary, the tribunal was clearly entitled to reach its conclusion. As to the precise amount of tax evaded, I do not see how it was possible in the absence of better records for Customs to do more than they did. Whether or not this would have been sufficient if the burden of proof had truly been on them, on the view I take of the law it was enough to support the tribunal’s conclusion.”

“But, as to the precise calculation of the amount of tax due, the burden rests on the appellant for all purposes.”

“However, in our judgment, HMRC are plainly right that, as per their submissions that we have set out above, if the challenge to the PLN was brought on the basis that the assessment to VAT on Zamco was wrong, the legal rules relating to the way in which the assessment could have been challenged by Zamco if it had appealed the assessment remain in play in any appeal against the PLN. As we set out above, it is well-established law that it is for the taxpayer to prove, by evidence, that an assessment to VAT issued by HMRC is incorrect. HMRC do not have that evidential burden and that cannot sensibly be affected by the fact that the challenge to the assessment occurs in satellite litigation where, as in this case, a penalty charged on Mr Zaman is sought to be defended on the basis that the assessment to VAT on Zamco was wrong. In our judgment, it is clear that the FTT lost sight of the fact that after establishing whether the PLN was validly issued, the evidential burden in relation to the assessment to VAT on Zamco shifted to Mr Zaman when he sought to positively challenge the assessment as the sole basis on which the PLN was invalidly issued: see the FTT’s overall conclusion at [96] as to whether HMRC had discharged the burden of proof: (emphasis added) ‘We thus find that it has not been proven, on the balance of probabilities, that the alcoholic goods in question were removed to the UK by Zamco or under its directions; and so, for the same reason, it is not proved that the place of supply of all of Zamco’s supplies in the relevant period was the UK, such that its VAT returns in that period contained inaccuracies. Given the burden of proof on HMRC, this means that we have to allow the appeal…’” ‘We thus find that it has not been proven, on the balance of probabilities, that the alcoholic goods in question were removed to the UK by Zamco or under its directions; and so, for the same reason, it is not proved that the place of supply of all of Zamco’s supplies in the relevant period was the UK, such that its VAT returns in that period contained inaccuracies. Given the burden of proof on HMRC, this means that we have to allow the appeal…’”

“an appeal … against the imposition of a penalty … engages different considerations because the proceedings are of a penal character and involve the exaction of money by the state from the taxpayer. For those reasons it is well established (and is common ground) that the burden of proof in penalty proceedings lies on HMRC, not on the taxpayer.”