“[12] There has long been an understanding among Nation States that one State should not seek to exercise the powers of its courts within the territory of another, without having the permission of that other State to do so. Any breach of that understanding by a court or tribunal in the United Kingdom risks damaging this country's diplomatic relations with other States and is, thus, contrary to the public interest. … “[19] Whenever the issue arises in a tribunal about the taking of evidence from outside the United Kingdom … what the Tribunal needs to know is whether it may take such evidence without damaging the United Kingdom's diplomatic relationship with the other country. … [I]t is not for this (or any other) tribunal to form its own view of what may, or may not, damage the United Kingdom's relations with a foreign State.”
“I repeatedly answered his accusations by stating that there were no other off-shore accounts or any foreign property but he made it very clear that he did not believe my answer.”
“Where a tax return cannot be submitted by the due date because actual figures are not know [sic], for whatever reason, then it is acceptable to submit a return with provisional or estimated figures so long as it is made clear that the figures are provisional or estimated. The return should then be amended as soon as possible and certainly no later than 12 months from the date it was filed with the correct figures. The filing date should not be allowed to go past without anything being submitted as this will lead to a penalty being charged.”
“Needless to say I was deeply traumatised by my treatment and this experience has stayed with me for life. I now believe that it resulted in PTSD and a fear of future unjust treatment at the hands of the British forces and actors. It simply endorsed everything I knew and had experienced in Ireland. My view of the British Government has been coloured accordingly and the interrogation by HMRC’s criminal investigation team brought back real vivid memories of the trauma that I suffered as a result of that previous interrogation. It caused me extreme anxiety before I had even attended at their offices. It was clear that HMRC were/are trying to make an example of me hence the overly oppressive, bullying and wholly inappropriate threat of criminal prosecution. It appears to me that this approach was deliberate and was possibly to deter other advisors from advising their clients (be they musicians, actors or sports personalities) from setting up a legitimate off-shore financial structure. They have clearly operated a government sanctioned “hostile environment” against me as well as other perceived tax avoiders/evaders. Various assessments raised by HMRC in relation to my tax liability bear no relation to reality. It is just figures plucked out of thin air which are not based on any evidence…. HMRC continued to raise unjustified assessments in relation to my tax liability for multiple years (post 2012) even though they must have known or ought reasonably to have known that such assessments were fundamentally erroneous as I was a 50% shareholder in a business with my wife (who was the other 50% shareholder) and thus HMRC had received tax returns from my wife relating to such years making it perfectly clear how much tax was due for me for the same years. In my opinion HMRC waged a campaign against me using maximum aggression to intimidate me in order to force me to capitulate and pay their vastly inflated and unjustified assessments to tax. These tactics included sending, I suspect deliberately, correspondence to my neighbours address (despite my repeatedly asking them not to – for example see my email to Mr Edwards dated23rd October 2012 ) to cause me maximum embarrassment, which they succeeded in doing. My 2014/15 Tax Return Given HMRC’s criminal investigation and general behaviour I became extremely anxious that if I submitted a tax return which was in any way incorrect then HMRC would use this against me as a means of prosecuting me for a criminal offence (as repeatedly threatened in correspondence) and ultimately as a means of sending me to prison. This in turn would mean I would never be able to practice as a solicitor. This was (and still is) a very real and genuine fear and all of HMRC’s subsequent actions towards me have only further endorsed this fear. Every evening I would return home from work in trepidation that a brown envelope from HMRC would be awaiting me containing further intimidating threats of action related to yet more imaginary or inflated assessments to tax. It would sometimes take me a whole week to overcome my anxiety just to be able muster the courage to open the envelope. My sleeping and health (both physical and mental) suffered to the point where I had become an insomniac. Consequently, I was constantly exhausted and would drink up to 10 cups of coffee a day just to be able to get through the day. My health has suffered enormously as a consequence. I have suffered from stress and at times I must confess that I have felt suicidal. I could not/cannot see a way out to a place where HMRC would start to behave reasonably towards me. I read various tragic newspaper articles over the years relating to other tax payers under investigation where HMRC have pursued the tax payer so relentlessly that the tax payer has committed suicide just to escape the constant intimidation. I can relate to this and understand why someone might ultimately be driven to this extreme as the only solution to escape from HMRC. The knock-on effect was that I was not prepared to submit my tax return in January 2016 without being absolutely sure that it was correct. I feared that if it was wrong in any respect HMRC would use this to bring criminal proceedings.”
“He [Mr Breen] acknowledged that he would have to submit his returns quickly. He asked me to record that he telephoned and was now working to get his SATRs to us.”
“I am now writing to inform you (in order that this is all placed on record) that I am doing everything possible to get the outstanding returns completed as quickly as possible however wish to draw attention to two influencing factors both of which are outside of my control – the first is the Christmas holiday season (which means my accountants are not as available as would be normal) and the second is that January is an extremely busy time of year for all accountants as am sure you fully appreciate. Nevertheless, as stated, I have explained the urgency of the matter to my accountants and they are endeavouring to complete the returns as quickly as possible.”
“We fully understand the position that you have taken in regard to the assessment of penalties in respect of the late filing of the 2014-15 tax return. [T]he circumstances around why this has happened would strongly suggest that Mr Breen had a very good excuse to act in the way that he has. Some seven years ago (on22 November 2012 ) Mr Breen had to attend an interview with HMRC at their offices in Staines, Middlesex. This interview was conducted under caution and took over 2 and 1/2 hours to complete. The stated intention by HMRC was to bring criminal charges against Mr Breen. However, these charges have never been brought but over the seven year period since the interview Mr Breen (whose life has been on hold in the intervening period) has had to endure a substantial level of intimidation and, in Mr Breen's view, bullying. During this period Mr Breen was very concerned that any information that he submitted on his personal tax affairs, if there was even the smallest error on the return, would be used against him to bring criminal proceedings as HMRC adopted a very aggressive approach. This concern together with the knowledge that if criminal proceedings were taken against him he would not be able to practice [sic] as a solicitor lead [sic] him to come to the conclusion that he could not file his returns. In these circumstances we trust that you will agree that Mr Breen's actions were justified because he felt threatened and intimidated which we understand also affected his mental health. Accordingly, we would submit that Mr Breen did have a valid and understandable reason for holding back his returns.”
“In our case Mr Breen had been subjected to a very harrowing experience with HMRC and, as he explained to me, he was convinced that the officials at HMRC dealing with his case were determined to crush him both mentally and financially. Indeed, Mr Breen is of the view that your response is yet further clear evidence of this fact and of the oppressive attitude of HMRC towards him. The issue at the heart of the dispute with HMRC was that of remitting income to the UK and Mr Breen is very clear that in his view his actions were in no way criminal as he has an Irish domicile and was therefore perfectly entitled to pay tax on a remittance basis for the relevant period the subject of the investigation. This point was subsequently accepted by HMRC which explains why no criminal proceedings were ever commenced against Mr Breen. This experience was gained not just during the taped interview under caution which took place on22nd November 2012 but from all the subsequent dealings with HMRC over the subsequent years. A further example of this is the fact that when Mr Breen submitted documentation to HMRC in response to an information request he was subsequently fined£300 for failure to submit the documents in time when he had in fact already submitted the said documents. Mr Breen subsequently raised a formal complaint in this regard and asked that a record be made that he had in fact complied in full with HMRC's information request and that he should be refunded the fine of£300 . However to this day HMRC have failed to do so despite having acknowledged that he had in fact complied with the information request within the time line set down. It is because of these experiences that Mr Breen came to the conclusion that in filing his tax returns if he made even the slightest error HMRC would use it as a means to bring a criminal prosecution against him as previously attempted. This was not some vague notion which Mr Breen held but rather was that it posed a real and present threat as evidenced by the previous actions taken by HMRC in 2012 in interviewing him at length under caution whilst being recorded for such purposes. The motive was not to deliberately stop HMRC from assessing his tax liability but it was to ensure that he did not give HMRC any opportunity however slight which they could use as a basis to launch a criminal prosecution against him. It is also worth mentioning that the HMRC officials that Mr Breen was dealing with (in meetings and correspondence) were very much aware that he had not filed his tax returns for subsequent years. This was discussed in meetings with them and Mr Breen was convinced that HMRC were laying [sic] in wait to entrap him and that on receipt of the returns they would go over them and forensically examine every detail. Even now he is still firmly of that opinion. It is also worth mentioning that Mr Breen did not receive any helpful advice (as you have subsequently given) from HMRC on what to do as regards his returns in the circumstances that he found himself in. In fact, Mr Breen was given no advice whatsoever in that regard. This point alone should, I would suggest, be a reasonable ground for establishing a reasonable excuse for failing to file.”
“6. Phone Call to HMRC - In 2017 I thought we were reaching a negotiated settlement with HMRC so it is entirely consistent that I felt I would soon be able to submit the outstanding returns, having agreed everything. Also as already stated as part of the negotiated settlement HMRC would have accepted my Irish domicile position….”
“ [70] … the task facing the FTT when considering a reasonable excuse defence is to determine whether facts exist which, when judged objectively, amount to a reasonable excuse for the default and accordingly give rise to a valid defence. The burden of establishing the existence of those facts, on a balance of probabilities, lies on the taxpayer. In making its determination, the tribunal is making a value judgment which, assuming it has (a) found facts capable of being supported by the evidence, (b) applied the correct legal test and (c) come to a conclusion which is within the range of reasonable conclusions, no appellate tribunal or court can interfere with. [71] In deciding whether the excuse put forward is, viewed objectively, sufficient to amount to a reasonable excuse, the tribunal should bear in mind all relevant circumstances; because the issue is whether the particular taxpayer has a reasonable excuse, the experience, knowledge and other attributes of the particular taxpayer should be taken into account, as well as the situation in which that taxpayer was at the relevant time or times (in accordance with the decisions in The Clean Car Co and Coales). [72] Where the facts upon which the taxpayer relies include assertions as to some individual’s state of mind (e.g. ‘I thought I had filed the required return’, or ‘I did not believe it was necessary to file a return in these circumstances’), the question of whether that state of mind actually existed must be decided by the FTT just as much as any other facts relied on… [73] Once it has made its findings of all the relevant facts, then the FTT must assess whether those facts (including, where relevant, the state of mind of any relevant witness) are sufficient to amount to a reasonable excuse, judged objectively. … [81] When considering a “reasonable excuse” defence, therefore, in our view the FTT can usefully approach matters in the following way: (1) First, establish what facts the taxpayer asserts give rise to a reasonable excuse (this may include the belief, acts or omissions of the taxpayer or any other person, the taxpayer’s own experience or relevant attributes, the situation of the taxpayer at any relevant time and any other relevant external facts). (2) Second, decide which of those facts are proven. (3) Third, decide whether, viewed objectively, those proven facts do indeed amount to an objectively reasonable excuse for the default and the time when that objectively reasonable excuse ceased. In doing so, it should take into account the experience and other relevant attributes of the taxpayer and the situation in which the taxpayer found himself at the relevant time or times. It might assist the FTT, in this context, to ask itself the question “was what the taxpayer did (or omitted to do or believed) objectively reasonable for this taxpayer in those circumstances?” (4) Fourth, having decided when any reasonable excuse ceased, decide whether the taxpayer remedied the failure without unreasonable delay after that time (unless, exceptionally, the failure was remedied before the reasonable excuse ceased). In doing so, the FTT should again decide the matter objectively, but taking into account the experience and other relevant attributes of the taxpayer and the situation in which the taxpayer found himself at the relevant time or times.”
“(1) If HMRC think it right because of special circumstances, they may reduce a penalty under any paragraph of this Schedule. (2) In sub-paragraph (1) “special circumstances” does not include- (a) ability to pay, or (b) the fact that a potential loss of revenue from one taxpayer is balanced by a potential over-payment by another. (3) In sub-paragraph (1) the reference to reducing a penalty includes a reference to- (a) staying a penalty, and (b) agreeing a compromise in relation to proceedings for a penalty.”
“(1) On an appeal under paragraph 20(1) that is notified to the tribunal, the tribunal may affirm or cancel HMRC’s decision. (2) On an appeal under paragraph 20(2) that is notified to the tribunal, the tribunal may— (a) affirm HMRC’s decision, or (b) substitute for HMRC’s decision another decision that HMRC had power to make. (3) If the tribunal substitutes its decision for HMRC’s, the tribunal may rely on paragraph 16— (a) to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or (b) to a different extent, but only if the tribunal thinks that HMRC’s decision in respect of the application of paragraph 16 was flawed. (4) In sub-paragraph (3)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review. (5) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 21(1)).”
“He [Mr Breen] acknowledged that he would have to submit his returns quickly. He asked me to record that he telephoned and was now working to get his SATRs to us.”
“I have considered whether a Special Reduction under paragraph 16 of Schedule 55 FA09 applies. A penalty may be reduced if there are special circumstances. Special circumstances mean circumstances that are uncommon or exceptional. I have carefully considered all of the information I hold but do not think there are any special circumstances which allow me to reduce the penalty.”