“Error in taxpayer's document (1) A penalty is payable by a person (P) where— (a) P gives HMRC a document of a kind listed in the Table below, And (b) Conditions 1 and 2 are satisfied. (2) Condition 1 is that the document contains an inaccuracy which amounts to, or leads to— (a) an understatement of a liability to tax, (b) a false or inflated statement of a loss, or (c) a false or inflated claim to repayment of tax. (3) Condition 2 is that the inaccuracy was careless (within the meaning of paragraph 3) or deliberate on P's part. (4) Where a document contains more than one inaccuracy, a penalty is payable for each inaccuracy.”
“19. Companies: officers' liability (1) Where a penalty under paragraph 1 is payable by a company for a deliberate inaccuracy 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. (3) In the application of sub-paragraph (1) to a body corporate other than a limited liability partnership “officer” means— (a) a director (including a shadow director within the meaning ofsection 251 of the Companies Act 2006 (c 46)), (aa) a manager, and (b) a secretary. … (4) In the application of sub-paragraph (1) in any other case“officer” means— (a) a director, (b) a manager, (c) a secretary, and (d) any other person managing or purporting to manage any of the company's affairs. (5) Where HMRC have specified a portion of a penalty in a notice given to an officer under sub-paragraph (1)— (a) paragraph 11 applies to the specified portion as to a penalty, (b) the officer must pay the specified portion before the end of the period of 30 days beginning with the day on which the notice is given, (c) paragraph 13(2), (3) and (5) apply as if the notice were an assessment of a penalty, (d) a further notice may be given in respect of a portion of any additional amount assessed in a supplementary assessment in respect of the penalty under paragraph 13(6), (e) paragraphs 15(1) and (2), 16 and 17(1) to (3) and (6) apply as if HMRC had decided that a penalty of the amount of the specified portion is payable by the officer, and (f) paragraph 21 applies as if the officer were liable to a penalty. (6) In this paragraph “company” means any body corporate or unincorporated association, but does not include a partnership, a local authority or a local authority association.”
“WM asked in respect of Steel City Metals and Steel City Machinery that have been recently set up. Steel City Metals so the name wasn’t taken by anyone else. These will be run under the Stembridge VAT and company number and there will be no inter company transactions.”
“The transactions and trades conducted with GPSE in periods 04/13 and 07/13 satisfied all the criteria advised…in that: - the goods existed and were as described, we knew both our supplier and customer. Our suppliers integrity at that time was not a concern to us, neither was our customers. Contrary to Mr McDonald’s assertions, the transactions were entirely commercially viable in that we were paying market prices and were able to make a profit, albeit small. We were not buying or indeed selling below market value, we were not selling at a loss, we were not getting inflated or unrealistic prices for the product. We paid valid VAT invoices, issued by a VAT registered company, into a UK high street bank (Barclays). The invoices that we issued were paid into our Nat West account by our customers. I would argue that the suggested checks were satisfied.”
“in what situation we would be left with stock for which the customer could not pay? We are dealing with our customers and suppliers on a regular basis.”
“However Mr McDonald further advises that the ‘metals trading activity previously undertaken by Carwood was continuing to be conducted at Parkers yard using the trading name Steel City metals Limited, a new company incorporated by Bell on24 December 2014 ’. This is a total fabrication and I am astonished given that Mr McDonald knows full well that the metals trading activity would, and was to be done by Steel City Metals, a trading name of Stembridge Machinery Sales & Rentals Limited…He also knows, because he asked at a subsequent visit to Stembridge that the only reason that Steel City Metals Ltd was registered was to prevent any other persons from trading with the same name.”
“There is no evidence that he took any meaningful steps to satisfy himself on the accuracy of the information before completing and signing the return, and in our view that constitutes recklessness, which it is well-established is sufficient for these purposes: per Lord Herschell in Derry v Peek [1886-90] All ER Rep 1 at 22: “… fraud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states.””
“I would simply apply the test of relevance as the test of admissibility of similar fact evidence in a civil suit. Such evidence is admissible if it is potentially probative of an issue in the action.”
“A well-settled rule of practice, which has long been familiar to users of the court's winding up jurisdiction, is that a debt that is wholly disputed on substantial grounds cannot ordinarily found the basis for the making of a winding up order…. It perhaps hardly needs to be said that the rule does not, however, entitle a company to do no more than assert that it disputes the debt…It is not sufficient for the company merely to raise a cloud of objections.”
“38. My conclusion on the question of abuse of process is that I agree with HMRC, that, barring special circumstances, it would be an abuse of the litigation process if the appellant were able to raise in this appeal an issue that was effectively decided against it when its MTIC appeal was struck out. While the appellant complains it is unfair if all the facts are not considered in his penalty appeal, that is really the point: the facts he wants considered are the facts that ought to have been considered in the MTIC appeal. The appellant’s own conduct led to that appeal being lost and in my view, based on the above binding authority in SCF, the same consequences must flow as if the hearing had taken place and the Tribunal had decided against the appellant. For true fairness, there must be finality in litigation. There is no second bite of the cherry. The MTIC appeal was the appellant’s only opportunity to litigate the question of connection to fraud and knowledge/means of knowledge of these 181 transactions. It threw away that opportunity by failing to comply with an unless order and lost the appeal: barring special circumstances, it cannot have another opportunity now to argue the same issues, albeit the subject matter of the appeal (a£3 million penalty) is different to the subject matter of the MTIC appeal (a£25 million input tax rejection).”
“SB said the Kittel principle assumes everyone is doing something wrong. I advised if he disagrees with our decision, he has a right of appeal. SB indicated he would not be doing this, saying that it has taken too long to sort out his previous appeal and he has had enough.”
“…barring special circumstances, it would be an abuse of the litigation process if the appellant were able to raise in this appeal an issue that was effectively decided against it when its MTIC appeal was struck out. While the appellant complains it is unfair if all the facts are not considered in his penalty appeal, that is really the point: the facts he wants considered are the facts that ought to have been considered in the MTIC appeal. The appellant’s own conduct led to that appeal being lost and in my view, based on the above binding authority in SCF, the same consequences must flow as if the hearing had taken place and the Tribunal had decided against the appellant. For true fairness, there must be finality in litigation. There is no second bite of the cherry. The MTIC appeal was the appellant’s only opportunity to litigate the question of connection to fraud and knowledge/means of knowledge... It threw away that opportunity by failing to comply with an unless order and lost the appeal: barring special circumstances, it cannot have another opportunity now to argue the same issues, albeit the subject matter of the appeal (a£3 million penalty) is different to the subject matter of the MTIC appeal (a£25 million input tax rejection).”
“(5) No appeal shall lie against a notice under this section as such but— (a) where a body corporate is assessed as mentioned in subsection (4)(a) above, the body corporate may appeal against the Commissioners' decision as to its liability to a penalty and against the amount of the basic penalty as if it were specified in the assessment; and (b) where an assessment is made on a named officer by virtue of subsection (3) above, the named officer may appeal against the Commissioners' decision that the conduct of the body corporate referred to in subsection (1)(b) above is, in whole or part, attributable to his dishonesty and against their decision as to the portion of the penalty which the Commissioners propose to recover from him. (6) For the purposes of theValue Added Tax Act 1983 , any appeal brought by virtue of subsection (5) above shall be treated as an appeal under s 40 of that Act; and the reference in subsection (1A) of that section to an amount assessed by way of penalty includes a reference to an amount assessed by virtue of subsection (3) or subsection (4)(a) above.”
“Subsection (5) of s 14 expressly rules out any appeal against a notice under that section 'as such' but does confer separate rights of appeal upon the company, if it is assessed under subsection (4)(a), and upon a named officer who has been assessed under subsection (3). Where the company is assessed, because it is not proposed to recover the whole of the penalty from one or more named officers, the company may appeal against the decision 'as to its liability to a penalty as if it were specified in the assessment.' A named officer who is assessed may appeal against the decision that the conduct of the company is in whole or in part, attributable to his dishonesty' and also against the decision 'as to the portion of the penalty which the Commissioners prepare to recover from him.' There is no doubt but that subsection (5) does itself create free standing rights of appeal, that is to say rights independent of any right of appeal unders 40(1) of the Value Added Tax Act 1983 . That is made clear by the first limb of subsection (6) of s 14. Mr Pleming [counsel for Customs] suggested that subsection (5) confers only limited rights of appeal and the named officer's rights of appeal are confined to the matters therein mentioned. I do not accept that submission. The result would be to curtail the named officer's rights so much, not just ruling out the kind of questions raised by Miss Lonsdale [taxpayer’s counsel] but also effectively excluding any substantive challenge to the basis of the penalty itself, that it cannot, in my view, have been Parliament's intention. It is not a conclusion to be reached without some very clear directions that that is the effect. Where the named officer is assessed part or the whole of the company's liability is in effect transferred. That portion, whether it be the whole or a part, is under s 14 made recoverable from the named officer 'as if he were personally liable under s 13 of [the 1985 Act] to a penalty which corresponds to that portion.' Neither of the matters in respect of which he is given an express right of appeal under subsection (5)(b) of s 14 refers in terms to the amount of the penalty. But paragraph (p) ofs 40(1) of the 1983 Act gives a right of appeal against a decision with respect to the amount of any penalty specified in an assessment under s 21 of the 1985 Act. Nowhere in s 14 is there any provision excluding an appeal under s 40(1)(p). The hypothesis upon which the named officer is assessed in respect of the portion of the basic penalty is that he is personally liable to a penalty under s 13 of that amount. If, notwithstanding that that is the basis upon which he is to be regarded as liable and so assessed, the Legislature did not offend him to be able to challenge on appeal the amount of the penalty, and its make-up, one would have expected to find that spelt out in s 14. On the contrary, the second limb of s 14(6) appears to confirm the existence of such a right. Subsection (1A) ofs 40 of the 1983 Act provides that, without prejudice to s 13(4) of the 1985 Act (which empowers the Commissioners or, on appeal, the Tribunal to reduce the penalty under that section where the taxpayer has given co-operation) '... nothing in subsection (1)(p) above shall be taken to confer on a Tribunal any power to vary an amount assessed by way of penalty, interest or surcharge except insofar as it is necessary to reduce it to the amount which is appropriate under ss 13 to 19 of that Act.' Section 14(6) directs that the reference in s 40(1A) to an amount assessed by way of penalty includes a reference to an amount assessed by virtue of s 14(3) on a named officer or by virtue of s 14(4)(a) on the company. Indeed it would be an astonishing result if the officer were to be unable to question the amount of the basic penalty when the company has that right, so long as some portion however small is not being recovered from the officer, and when the company is unlikely to have the interest to pursue any such right, assuming it has one which is very doubtful, where the whole basic penalty has been assessed upon that officer. By similar reasoning, in my judgment, the right of appeal with respect to a decision with respect to any liability to a penalty by virtue of s 13 which is given bys 40(1)(o) of the 1983 Act is available to a named officer assessed under subsection (3) of s 14. Whilst there is nothing elsewhere in the section to confirm the existence of that right, as in my view there is with regard to the right of appeal under s 40 (1) (p), the draftsman has not sought to exclude it expressly. In Ch II of the 1985 Act, which includes ss 13 and 21, there are examples of rights of appeal being given in respect of specific matters in the sections dealing with particular penalties and surcharges which sit alongside and do not entrench upon the general rights of appeal under s 40(1)(o) and (p). That appears in regard to the right under s 19(6) of the 1985 Act - see the analysis in Dollar Land(Feltham) Ltd v Customs and Excise Commissioners[1995] STC 414 , which Mr Pleming referred to as a very recent reminder of how the Tribunal's powers are circumscribed.”