“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”
“The notion that the 25 files should simply be left available for the Judge to ‘dip into’ (untutored) is fanciful.”
“… It cannot be assumed that just because a document appears in a hearing bundle that the tribunal panel will take account of it; if a party wants the tribunal to consider a document then the party should specifically refer the tribunal to it in the course of the hearing (see Swift & others v Fred Olsen Cruise Lines[2016] EWCA Civ 785 at [15]). This is not least to give the tribunal adequate opportunity to consider and evaluate the document in the light of the reliance a party seeks to place on it, but also to give the other party the opportunity to make their representations on the document. That is particularly so where, as here, there were several hearing bundles before the FTT relating to the various previous proceedings and the one containing the relevant additional documents was voluminous comprising 434 pages.”
“… we would not see it as necessary, or indeed proportionate, for a forensic exercise to be undertaken, either by the parties or by the tribunal, to identify any such matters in each witness statement and for the tribunal formally to direct that they be excluded. Generally speaking, we think that the parties can rely upon the good sense of the tribunal to disregard purported evidence that represents conclusions that the tribunal itself must reach. That can usually conveniently be the matter of submission at the substantive hearing, rather than a formal application to exclude.”
“There were two types of cash and carry, and certainly some of the larger cash and carries such as operated by some of the UK supermarkets had certainly gone. There were still quite a number of much smaller operations of the type that I visited, but the general scale of that cash and carry activity in Calais and the surrounding area had started to die off by the end of the - the early part of the 2000s.”
“I perhaps don’t fully”
“Yes, but his [Mr Malde’s] company was Park Royal Wholesale.”
“… confidential so there were no shareholder and director registers that were publicly available. It was a confidential jurisdiction.”
“Sorry, I don't understand the question. Lifting the veil of incorporation? What do you mean by that?”
“…unless I had some information to the contrary and some information has come to light since the original – which would possibly lend themselves to some kind of an adjustment to be made”
“The Investment document was signed by Parul Malde on behalf of Sintra Global and is dated20 January 2012 .”
“… it is our client’s understanding that it [the Investment Agreement] was signed by Mr Arnaud Carre on behalf of Sintra Global Inc, while being present in the BVI. The contract was also signed by Mr Arjun Babber of Goldsteel Ltd, in Dubai.”
“Our client confirms that the entity has not undertaken any transactions with Parul Malde.”
“… in order to limit the volume of material before the tribunal it must have been omitted.”
“Unless I am misunderstanding Mr Simmonite, it seems by questioning whether documents are genuine Mr Simmonite may be implying that HMRC may be manufacturing evidence.”
“5. One of the suppliers to Corkteck was a company called Sintra SA (“Sintra”), which was based in Belize (ie outside the EU) and which had a European office in Poland. It was not a trader registered for VAT purposes in the EU. 6. Sintra approached Corkteck in early 2005 to ask if Corkteck could sell cans of Red Bull soft drinks to Sintra (invoicing Sintra for them), but deliver them to Sintra’s own customer in Poland, Konto. Konto was a trader registered for VAT purposes in the EU. Corkteck, through Mr Malde, was happy to assist Sintra. However, he was aware that there was a problem in relation to the VAT position regarding the proposed transaction, which differed from the type of transaction which he was familiar with, involving sale of goods by Corkteck to VAT registered traders in other EU countries. … 8. Mr Malde’s evidence was that he was aware that if he just invoiced Sintra as his customer he would have to charge it UK VAT, while Sintra would still have to pay Polish VAT on its onward sales of the drinks to Konto. He was concerned to avoid this situation, if he could, since this might make the pricing of the transaction unattractive to Sintra, with the result that Corkteck might lose the business. If Corkteck supplied direct to Konto, the supply would be zero rated. However, Mr Malde was not prepared to try to deal direct with Konto, since Corkteck had an ongoing business relationship with Sintra which he did not wish to jeopardise by cutting Sintra out of the transaction. Mr Malde was aware that in the transaction which was contemplated Sintra, not Konto, was to be Corkteck's customer.”
“The purpose of this report is to respond to HMRC. This report has been read, agreed and approved as true and complete, to the best of his recollections, by PM [Mr Malde].”
“I haven’t stated it is Pat, but I haven’t stated it wasn’t. So, I can’t understand – there is no particular reason that I can think of why it’s not said.”
“I can’t recall. I’m assuming Pat must have asked for a second bank account. I can’t recall why the second account was opened.”
“… have been something along the lines of referrals … to get commissions.”
“… it will be a Belize set up and a Cyprus bank account”
“I’ve never called that number … I’ve never tried to contact him by phone.”
“2. The decision in Agbabiaka includes the following: “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.” “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. […] it 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.” 3. The decision records – and treats as determinative – the stance of the Foreign, Commonwealth and Development Office (FCDO) that only the giving of oral evidence from a Nation State requires the permission of that State. Permission is not needed for written evidence, or for submissions (whether oral or written). The Guidance (which was re-issued on28 July 2022 to clarify that permission is not required where individuals wish to give video and telephone evidence from within the United Kingdom, the Crown Dependencies Jersey, Guernsey or the Isle of Man , or British Overseas Territories Anguilla, Bermuda, British Antarctic Territory, British Indian Ocean Territory, Cayman Islands, Falkland Islands, Gibraltar, Montserrat, Pitcairn, Henderson, Ducie and Oeno Islands, St Helena, Ascension and Tristan da Cunha, South Georgia and the South Sandwich Islands, The Sovereign Base Areas of Akrotiri and Dhekelia, Turks and Caicos Islands and Virgin Islands ) continues by describing the process by which permission may be obtained from the FCDO Taking of Evidence Unit, the decision of which regarding the stance of a particular overseas government will be determinative, and the assistance provided by HM Courts and Tribunals Service warning that the process “can take months”. “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.” “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. […] it 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.”
“… one starts with asking a question whether the evidence is admissible. It is admissible if it is relevant. It is relevant if it is potentially probative of one of the issues in the case. One then asks, notwithstanding that it is admissible evidence, whether there are good reasons why the court, or tribunal in this case, should nevertheless direct it be excluded.”
“… findings of fact made by another decision maker are not to be admitted in a subsequent trial because the decision at that trial is to be made by the judge appointed to hear it (“the trial judge”), and not another. The trial judge must decide the case for himself on the evidence that he receives, and in the light of the submissions on that evidence made to him. To admit evidence of the findings of fact of another person, however distinguished, and however thorough and competent his examination of the issues may have been, risks the decision being made, at least in part, on evidence other than that which the trial judge has heard and in reliance on the opinion of someone who is neither the relevant decision maker nor an expert in any relevant discipline, of which decision making is not one. The opinion of someone who is not the trial judge is, therefore, as a matter of law, irrelevant and not one to which he ought to have regard.”
“95. In recent years there have been a number of first instance judgments which have helpfully crystallised and advanced learning in respect of the approach to evidence. Three decisions in particular require citation. These are: • Gestmin SGPS SA v Credit Suisse (UK) Limited[2013] EWHC 3560 (Comm) – Leggatt J (as he then was) • Lachaux v Lachaux [2017] EWHC (Fam) – Mostyn J • Carmarthenshire County Council v Y[2017] EWFC 36 – Mostyn J”
“96. Rather than cite the relevant paragraphs from these judgments in full, I shall attempt to summarise the most important points: i) Gestmin: • We believe memories to be more faithful than they are. Two common errors are to suppose (1) that the stronger and more vivid the recollection, the more likely it is to be accurate; (2) the more confident another person is in their recollection, the more likely it is to be accurate. • Memories are fluid and malleable, being constantly rewritten whenever they are retrieved. This is even true of “flash bulb” memories (a misleading term), ie memories of experiencing or learning of a particularly shocking or traumatic event. • Events can come to be recalled as memories which did not happen at all or which happened to somebody else. • The process of civil litigation itself subjects the memories of witnesses to powerful biases. • Considerable interference with memory is introduced in civil litigation by the procedure of preparing for trial. Statements are often taken a long time after relevant events and drafted by a lawyer who is conscious of the significance for the issues in the case of what the witness does or does not say. • The best approach from a judge is to base factual findings on inferences drawn from documentary evidence and known or probable facts. “This does not mean that oral testimony serves no useful purpose… But its value lies largely… in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth”. ii) Lachaux: • Mostyn J cited extensively from Gestmin and referred to two passages in earlier authorities (The dissenting speech of Lord Pearce in Onassis and Calogeropoulos v Vergottis[1968] 2 Lloyd’s Rep 403 , 431; Robert Goff LJ in Armagas Ltd v Mundogas SA[1985] 1 Lloyd’s Rep 1 , 57). I extract from those citations, and from Mostyn J's judgment, the following: • “Witnesses, especially those who are emotional, who think they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason, a witness, however honest, rarely persuades a judge that his present recollection is preferable to that which was taken down in writing immediately after the incident occurred. Therefore, contemporary documents are always of the utmost importance…” • “…I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective fact proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities…" • Mostyn J said of the latter quotation, “these wise words are surely of general application and are not confined to fraud cases… it is certainly often difficult to tell whether a witness is telling the truth and I agree with the view of Bingham J that the demeanour of a witness is not a reliable pointer to his or her honesty.” iii) Carmarthenshire County Council: • The general rule is that oral evidence given under cross-examination is the gold standard because it reflects the long-established common law consensus that the best way of assessing the reliability of evidence is by confronting the witness. • However, oral evidence under cross-examination is far from the be all and end all of forensic proof. Referring to paragraph 22 of Gestmin, Mostyn J said: “…this approach applies equally to all fact-finding exercises, especially where the facts in issue are in the distant past. This approach does not dilute the importance that the law places on cross-examination as a vital component of due process, but it does place it in its correct context.” 97. Of course, each case must depend on its facts … as well as the manner of the happening of an event and all the other material matters. Nevertheless, they are important as a helpful general guide to evaluating oral evidence and the accuracy/reliability of memory.” • Gestmin SGPS SA v Credit Suisse (UK) Limited[2013] EWHC 3560 (Comm) – Leggatt J (as he then was) • Lachaux v Lachaux [2017] EWHC (Fam) – Mostyn J • Carmarthenshire County Council v Y[2017] EWFC 36 – Mostyn J” • We believe memories to be more faithful than they are. Two common errors are to suppose (1) that the stronger and more vivid the recollection, the more likely it is to be accurate; (2) the more confident another person is in their recollection, the more likely it is to be accurate. • Memories are fluid and malleable, being constantly rewritten whenever they are retrieved. This is even true of “flash bulb” memories (a misleading term), ie memories of experiencing or learning of a particularly shocking or traumatic event. • Events can come to be recalled as memories which did not happen at all or which happened to somebody else. • The process of civil litigation itself subjects the memories of witnesses to powerful biases. • Considerable interference with memory is introduced in civil litigation by the procedure of preparing for trial. Statements are often taken a long time after relevant events and drafted by a lawyer who is conscious of the significance for the issues in the case of what the witness does or does not say. • The best approach from a judge is to base factual findings on inferences drawn from documentary evidence and known or probable facts. “This does not mean that oral testimony serves no useful purpose… But its value lies largely… in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth”. • Mostyn J cited extensively from Gestmin and referred to two passages in earlier authorities (The dissenting speech of Lord Pearce in Onassis and Calogeropoulos v Vergottis[1968] 2 Lloyd’s Rep 403 , 431; Robert Goff LJ in Armagas Ltd v Mundogas SA[1985] 1 Lloyd’s Rep 1 , 57). I extract from those citations, and from Mostyn J's judgment, the following: • “Witnesses, especially those who are emotional, who think they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason, a witness, however honest, rarely persuades a judge that his present recollection is preferable to that which was taken down in writing immediately after the incident occurred. Therefore, contemporary documents are always of the utmost importance…” • “…I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective fact proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities…" • Mostyn J said of the latter quotation, “these wise words are surely of general application and are not confined to fraud cases… it is certainly often difficult to tell whether a witness is telling the truth and I agree with the view of Bingham J that the demeanour of a witness is not a reliable pointer to his or her honesty.” • The general rule is that oral evidence given under cross-examination is the gold standard because it reflects the long-established common law consensus that the best way of assessing the reliability of evidence is by confronting the witness. • However, oral evidence under cross-examination is far from the be all and end all of forensic proof. Referring to paragraph 22 of Gestmin, Mostyn J said: “…this approach applies equally to all fact-finding exercises, especially where the facts in issue are in the distant past. This approach does not dilute the importance that the law places on cross-examination as a vital component of due process, but it does place it in its correct context.”
“… because a lot of the time when I call someone and they say, “who is speaking?” and I say, “Parul”, I get, “Carol” or, “Daryl” at the other end of it, and Bruno is easier because when you hear it you know it’s Bruno. When you say Parul, people don’t know the word and they get confused.”
“An accepted status generally means that the loads were seized and a diverted status can often be because the load has been stopped, problems have been identified and the goods have been diverted back to the warehouse to prevent seizure.”
“This letter is confirmation that Altion Limited are now dealing with all issues concerning the above on our behalf, as we are the owners of the goods and can you please deal with them directly until further notice.”
“We write further to your letter dated6 October 2011 and the previous correspondence of our Richard Galvin. In that letter you required proof of ownership of the seized goods pursuant to a letter sent to our client’s previous representatives. We note from the eAD enclosed herewith that the ownership of the goods is not immediately clear from the parties set out therein. We have corresponded with both JM Services and Belgian Beverages Company bvba and have asked them to clearly set out the relationship and ownership of the goods in this matter. As you will see from the enclosed correspondence submitted directly to us, JM Services have confirmed that they are representatives for Sintra SA’s business activities in Europe and have confirmed that all stock in relation to Belgian Beverages Company does not belong to JM Services and is instead owned by Sintra SA. We have also enclosed a letter from Belgian Beverages Company clearly confirming what has been stated by JM Services and confirming that the goods that are the subject of the seizure, and as particularised on the eAD enclosed herewith, were held in the account of JM Services which as has already been explained in the other letter means they are the property of Sintra [SA]. In light of the enclosed we trust that the identity and relevance of the entities set out in the eAD has now been clarified. It is absolutely clear that our client is the owner of the goods in question. We therefore await restoration of the goods.”
“This letter is confirmation that Altion Limited are now dealing with all issues concerning the above on our behalf, as we are the owners of the goods and can you please deal with them directly until further notice.”
“… act as representative” for SA in Europe and that “all stock that is put in, held, and/or taken out of our account at bonded warehouse [BBC] – Zaventem – Belgium, does not belong to us, but is owned by [SA] Belize.”
“… you have requested the return of your goods, namely 17,222.4 litres of beer which was seized by UK Border Agency at Dover on9 March 2012 ”
“I would expect the owner of the goods actually to be involved in the condemnation proceedings, but certainly the consignor or consignee could initially ask for further details about any seizure or interception advised to it by Border Force. When it comes to actual proceedings in relation to the condemnation of any goods or vehicle seized, then I would expect the owners to have sent goods or vehicles to the people taking that litigation forward.”
“Telephone call received yesterday –17 February 2014 from Senior Officer – Y Sanger regarding cross tax working and he has been given my name as CITEX officer, and to attend a case conference. They have alcohol monitoring cases for Corkteck Ltd and for assoc business Park Royal Wholesale Ltd. I was advised by Y Sanger that Mr Malde has been interviewed by SI Leeds office and a Letter issued to him requesting full disclosure on questions raised during the interview. I explained that at present I am not dealing with any references for the 2 traders as SI Leeds-Excise have an ongoing case. Spoke to SO John Malarkey about this and he was not aware of any monitoring cases for Corkteck or PRW. He has one case for cancellation of the Reg Consignee Approval. … Agreed to attend on Monday24th Feb 2014 for the case conference.”
“Case received on Caseflow Cancellation of Reg Consignee. Discussed with John Malarkey SO, on why the cancellation needs to be progressed. Trader has requested it on the basis that the bank is looking to cancel the guarantee that is in place.”
“... I do him favours in as much as if, if he’s got samples coming in he sometimes leaves them at my place to be picked up to go with his stuff.”
“… my father calls me Bruno, customers call me Bruno sometimes when they come down … I’ve got paperwork in my offices where invoices are made but they’re made to Bruno Malde at Corkteck not Parul Malde at Corkteck. It’s just a name everybody uses.”
“The only thing I can imagine is, back in 2000, cars had their own mobile phones, so if it’s a SIM card in one of my cars, possibly, but it’s not my mobile phone. I carry a mobile phone, it’s not my mobile phone, but it could be a car phone in a car that I was driving, but I don’t know.”
“We understand from [Mr Malde] that he undertook this favour to the directors of the company for two reasons. The first as they were reluctant, for religious reasons, to be associated with a business that traded in alcohol. The second was that one of the directors was a Turkish National who was not able to open a bank account in the Republic of Cyprus”
“It was a matter of getting the company formed, getting the documents and giving them over. Like I have said what I have done there is what Turner Little has told me to fill out and sign. … if they said to me “it is required of you to do this, this, this”, that is what I would have done on the information I gave him at the time. But the intention always was as soon as this company’s bank account was set up, was to give all the information, all the documents over to Pat for her to run their companies, they had nothing to do with me after that point.”
“… the company certificate, the Mem and Arts, all the standard stuff that you get given, and transfer forms and stuff like that…”
“My understanding was it was her company, it had nothing to do with me after that point; I just transferred it over to her that was my understanding;”
“I didn’t think of it at the time as being overly important, as far as I was concerned Turner Little had filled the forms out, made me fill the documents out, gave me the documentation and that was a transfer of a company that was already established a set up from the previous owners transferred to me, and I did the same I didn't think twice of it.”
“I/We the undersigned being the beneficial owners of all the issued shares of the company hereby undertake to deliver to yourselves for safe custody all present original bearer share certificates and/or any additional ones which may be issued or converted from registered to bearer shares, as permitted by the Company’s Memorandum and Articles of Association, at any future time. Furthermore I/we undertake to inform you of any changes in the present company’s share holding and to provide passport copies, the home address and evidence of home address of any additional beneficial owners.”
“As explained on a number of occasions Mr Malde opened the bank account on behalf of third parties. He immediately transferred the control of that account to those parties and was not involved in any trading that might be reflected in that account. However, Mr Malde does recall that, at the request of the third parties, he did occasionally instruct FBME Bank to transfer funds from the Sintra SA account. This was usually done by sending a fax to the bank instructing it to pay the relevant party. Mr Malde has not retained copies of these instructions and cannot now recall which payments were made on this basis. None of these debits were for the benefit of Mr Malde or his businesses. Mr Malde did instruct the bank to move funds to the Sintra Global account when the Sintra SA account was closed. Mr Malde was only involved in crediting funds into the Sintra SA account when he first opened the account. He deposited a cheque from Corkteck in the sum of£2,000.00 which was reimbursed to him.”
“I had a request from Pat, I have always trusted her, she said “do me a favour, can you do this”, I did it and sent it off. It wasn’t a conscious thought in my head why she asked me, why this, it was just “yeah, okay”.”
“To incorporate the entities we need the names for the entities (we recommend sending two or three in order of priority to check the availability) name and address for the power of attorney, name and address of shareholder, name and address of the protector of the foundation (if any), name and address of the beneficiary(ies), passport copy of the beneficial owner, power of attorney etc.”
“Name of Foundation: The Allardice Foundation. Founder: Cambra La Duke and Co to appoint Founder Council: Cambra La Duke and Co to appoint Council Beneficiary Name: Parul Keshavlal Malde Beneficiary Address: [Mr Malde’s home address] Date of Birth: 20/09/71 Name of Subsidiary Company: Sintra SA Shareholder: (above foundation) Director: Cambra La Duke and Co to appoint Director Power of Attorney in favour of: Same as Beneficiary of the Founder.”
“Registered to The Record … Since February Seventeenth of Two Thousand And Eleven in The Section of Private Interest Foundations. That the Foundation is in Existence. That The Founder(s) is (are): 1) CL Corporate Services Inc That the Members of the Council are: Tatiana Itzel Saldaña Escobar Humberto Gregorio Barrera Mojica Fernando Enrique Montero De Gracia The Resident Agent of the Foundation is: Cambra La Duke & Co That The Person(s) with Right to Sign is (are): The Individual Signature of the Protector will bind the Foundation regarding any Act, Transaction Or Business. The Council May bind the Foundation with the Joint Signature of two (2) of the Members if it is composed of physical persons or the Sole Signature of the Legal Representative if it is composed of a Juridical Person. The agreements of the Council whereby the Foundation is obligated will have to be endorsed by the Protector”
“The appointed main Beneficiary will remain as such during all the time that the Foundation exists, but can be removed and replaced only by the Protector. … This document may be amended and/or additioned or revoked only by the Protector.”
“Undertake the representation of the Corporation before any judicial, administrative, fiscal labour or maritime authority, as well as before any other public or private personal or institution. … Open, operate and close bank accounts in banks and other financial institutions; to withdraw against their funds held by the Corporation in such accounts, as well as to make deposits therein; and to purchase shares, bonds, titles and obligations in the name of the Corporation.”
“The other day I mentioned we had incorporated a Panamanian company with Panama foundation for our client Paru1 Malde (aka Bruno). The company has now been incorporated and foundation incorporated and they are awaiting copies of Swiss bank forms and Cyprus bank forms to have signed by the various nominees and return to our offices for Bruno to sign as signatory. They will also send us apostille identification and utility bills and a reference each (but will need reminding when we send the bank forms). I appreciate this is a major job! I have passed you the copies of the company documents however if you need clarification on the company details (ie registered office address, nominee director details, nominee founder details, nominee council details, company numbers or anything else) please e-mail … of Cambra La Duke Law Firm at the email address below.”
“Wholesale of general products, including beverages, plastics and bags within Europe. These goods are purchased from the Far East and sold to clients within Europe.”
“Dear Sirs, Please be informed that our courier will be contacting you by telephone today to arrange meeting to make payment on our account. The monies paid today will be:£59,000.00 Best regards, Sintra SA (Europe)”
“… gather further information for consideration of any liability that the trader might have to register for TVA in France and any disclosure to be made under Article 19 of EC Regulation 1798/2003”
“Letter sent to York Wines Ltd on17th December 2007 requesting audit trail in respect of purchases from Iceaction Limited. Iceaction Limited invoice 4855 dated 22.1.07. This covered 2080 cases Budweiser. This was paid by bank transfer on 27.2.07. These goods were held on Wybo reference 18353. Released as follows:- 160 cases to Newside [one of the cash and carries] French duty paid for the account of Sintra SA Germany.”
“Not a lot, like I said I think I met them in someone’s warehouse, had a conversation. I could see what they were supplying and it went from there, I think. Didn’t know much else about them.”
“Hi mate can you talk. I’m on the road can you do me a couple of releases for Wybo (inaudible) GALAT G. A. L. A. T, French duty paid in brackets. 720 Carling, 3036 (inaudible) 640 Fosters, 30311. 640 Stella on the 30259 and a BOND A cup number a 161443. That’s the same again for Carling as the Fosters yeah but I’m waiting for this, I’m waiting for another Stella rotation number because that will be on A237308. I’ve got to give you another 640 of Stella from somewhere so that will leave you hopefully (inaudible). Yeah, yeah he likes to send the person and hopefully I can get loads of Credits (inaudible). That 2000 never went in, erm, I have got a cheque (inaudible) today.”
“I just wanna lose no more money. I can make good money with people like – I don’t wanna (inaudible), a lot less hassle, (inaudible) proper service, but at the moment I’m getting – I’m getting hurt so bad because of these dogs. H, 700 – he won’t (inaudible) well, well it’s cleared (inaudible) but it’s still 700 – well yeah, yeah. Yeah just keep drip feeding it and it helps. I’ve got (inaudible) Carlings (inaudible) erm – if I can (inaudible) Yeah, yeah. Right, Oh (inaudible) alright. Right, OK, He’s not going? Yeah? Oh right, so he’s – and now do you (inaudible) into Sintra. Right, I’ll get – I’ll get on that now. Right on that now, OK”
“… alleged trading linkage with other Italian and European companies including association with suspected UK and/or UK based criminal organisations.”
“… I would therefore like a response from you as to your involvement with [Global], your role in the business, copies of the accounts of the company from when it was incorporated in Malaysia, copies of all business bank statements from the date the bank account was opened in Cyprus. Schedules of all purchases and sales from their date of incorporation. Details of any corporation tax paid by the company, to whom and when and copies of all related correspondence with any relevant tax authority. I have contacted Polish Customs and asked them to visit another of CORKTECK LTD’s customers/suppliers, ADRENA SP ZOO (hereafter “ADRENA”) They have provided me with a large quantity of commercial material from ADRENA who I know are now the company in the supply chain that now sits between CORKTECK LTD and [SA]. According to ADRENA’s bank statements ADRENA only buy from CORKTECK LTD, [SA] or CANNDOBEERS LTD and only sell to [SA], [Global] or CORKTECK LTD. I have examined the copy sterling bank statements from “ADRENA” and note that between Jan - Dec 2012 there are 18 entries on the statement relating to [Global] – the bank account reference from the originating bank again has [Mr Malde’s home address] as the account associated address. I would therefore like you to provide a credible explanation as to how your home address is directly linked to this bank account? A copy of a page from the ADRENA bank statement showing three of the eighteen entries. (partly redacted for confidentiality reasons is [ENCLOSURE 11]. The identical Cypriot bank account number also appears on 270 invoices from [Global] to a company called BEST BUYS SUPPLIES LTD (a UK company) during 2012 and 2013. I have calculated that average invoice value for these supplies is£22,348 per invoice using this sample. All of the invoices state that the account is held at the FBME Bank Ltd which is in Nicosia, Cyprus. The invoices identified run to over£6m [ENCLOSURE 12]. The identified invoice sequence between31 July 2012 and31 July 2013 is Inv numbers 299399 to 304849 respectively. A run of some 5,450 invoices. This indicates to me that [Global] has a turnover (estimated) of around£121.7m during this period based upon the above invoice sample. Finally, I have a copy of a document obtained from the Ministry of Finance in Cyprus who have contacted the FBME Bank in Cyprus at the request of HMRC and confirmed that you, Parul Keshavlal Malde are the SOLE BANK SIGNATORY to the bank account held in the name of SINTRA SA at the FBME Bank in Cyprus. HMRC therefore hold irrefutable evidence also linking you directly to [SA’s] bank account in Cyprus which indicates to me that you are in fact in financial control of the company [SA] [ENCLOSURE 13] This directly contradicts almost every piece of information you have previously given in interviews with Police, HMRC and Judiciary with regard to your stated “arms length” relationship with [SA].”
“I don’t know which companies I was paid Commission for. I know which ones I introduced them to. Whether they traded after that, I don’t know. If I had an introduction, if someone came to me looking for something that I couldn’t give them, or something in Europe, I would say “speak to Pat, maybe she can help you.”
“… said to me “it has to stay in the Foundation, and that’s what needs to be done”, for me that was fine. It dragged on and on and she hadn’t got another person to sign on the account, at that point I just said, “look I can’t wait for you to do this, resolve this any longer, it needs to be moved”, which is when I went and got the company sorted.”
“The following bespoke corporate services had been ordered: • Strike off Panama Company “Sintra Global Inc” and remove nominee directors (NB the foundation owner of this company will continue to exist.”
“Client called for new company incorporation to be owned by his existing Panama foundation and which will be involved in his international based trading within the food and drink wholesale industry. The company will sell many major brands including coca cola on a wholesale basis throughout the world and the client has been utilising several other companies (some formed by TL) to provide the same and similar services for many years. The client wishes to use a Seychelles company because it offers him privacy and has less red tape than EU companies.” • Strike off Panama Company “Sintra Global Inc” and remove nominee directors (NB the foundation owner of this company will continue to exist.”
“Client is visiting the office on Thursday so we will be seeing him face to face and he has been to the office on a number of occasions previously. Request certified ID although we will be certifying it anyway when he comes in. Please also request a banker’s reference from his existing bank FBME to evidence his previous trading within the sector and check the business activities of the company on bank forms against my notes and also look at the suppliers named on the bank form.”
“According to our records Mr Parul Keshavlal Malde, is the sole beneficial owner, and sole authorised signatory on the above company’s account.”
“Ownership and Directorship The units of ownership in Amirantes International Trading Inc are registered shares. The authorised share capital of the company (the allowance of shares that can be issued during the company’s lifetime) is five thousand shares of US$1.00 each. Upon incorporation, one share in the company was issued to your existing Panama Foundation: “The Allardice Foundation”
“Wholesale of food and beverages in Europe and globally. We trade in container loads of branded items eg Coca-Cola, Cadburys, Stella Artois. Both duty paid and in bonded warehouses. Most of our deals in Western Europe although we do occasionally import from Middle and Far East. We are known within the industry and have an existing customer and supplier base.”
“… log in information and uploading the bank account contract and source of funds declaration and supporting documents.”
“Ashe just spoke to Parul and all looks good. He did however mention that the client will be funding the a/c with$2.5 million from a company that he is also a beneficial owner of “Sintra Global Inc.”
“… following bespoke corporate services have been ordered”
“… he had to get his money out of the FBME bank account as the UK authorities are after him”
“Not specifically this account. As I said after the [EPB] account got closed Turner Little got back to me and said “look, the account’s been closed and we need to open another account for you”
“We [Amirantes] are an international trading company that specialises in bulk sales of food and beverages. We purchase goods all around the world and supply mainly to the European markets although we are able to deliver goods anywhere in the world. Our trade is mainly in branded goods such as Stella Artois beer, Fosters lager, Budweiser lager, Coca-Cola products, Blossom Hill Wines, Heinz products, Napolina tinned tomatoes to name but a few. We also purchase non-branded goods, especially when we buy in bulk shipments such as vegetable oils.”
“… to prove the source of the£2,840,000 initial deposit”
“… never gone against what they said, because they are, in all intents and purposes the bank’s agents.”
“… all of a sudden some problem within the bank or within the Seychelles and then stopped opening bank account for a while.”
“Parul Keshavlal Malde is the director, signatory and the ultimate beneficial owner of DUNNS RIVER WORLDWIDE INC, …, with correspondence and registration address …, Belize City, Belize and business address … Weimar, Germany.”
“A criminal gang has been jailed for one of the biggest ever alcohol smuggling frauds ever uncovered in the UK. The scam was worth£50m a year in unpaid duty and VAT and allowed the gang members to spend recklessly on high performance cars and luxury properties throughout Europe. Gang ringleader Kevin Burrage, 49, owned Prompstock Ltd, a bonded warehouse in Essex. His brother-in-law, Gary Clark, 55, managed the warehouse which the pair used to import and export alcohol without paying a penny in tax. The gang bought household branded beer, wine and spirits from bonded warehouses in France and imported it duty free into the UK, destined for Prompstock. Once safely through customs, the alcohol was illegally diverted to locations around the UK where it was sold on without duty being added. The gang also reversed the fraud by appearing to send trucks to France loaded with non duty paid alcohol. The alcohol actually remained in the UK and was sold on, again with no tax added. To avoid detection, the gang sent empty trucks to the continent, several of which were intercepted by UKBA officers. Accomplice Michael Turner owned Keytrades (Europe) Ltd which provided a seemingly legitimate cover for movements of the alcohol consignments. Davinder Singh Dhaliwal operated as Burrage’s righthand man, organising the delivery of large quantities of alcohol ready for distribution. Following a covert surveillance operation, the gang was arrested in a series of dawn raids by HMRC officers in November 2008.”
“The offending took place in the wider context of the large-scale movement of smuggled, that is, non-duty paid, alcoholic drinks, mainly wines and beers onto the open market through outlets which have been generically described as cash and carries – the so-called grey market in such goods. Inherent in that trade is the evasion of very substantial quantities of excise duty; but none of you is said to have been involved in that side of the business. The fraud which you carried out in effect provided a service to those involved in the wider activity while at the same time generating a second source of unlawful profit by cheating the public revenue of the VAT properly payable on the transactions between the companies which you ran, whether they were genuine transactions or, as seems now to be broadly accepted, mainly paper transactions the purpose of which was, in the words of Sarah Macdonald, the officer of HMRC who acted as the Officer in the Case “to clean the stock and make it look like it has been purchased legitimately” from the first company in the chain.”
“…payment, instead of being relayed back down through the companies involved in the supply chain would be diverted into third party companies and then onward to entities in the UK and overseas with no apparent connection with the original supply. In this way a total of just over£37 million were channelled to entities in the UK and fractionally under£50 million to entities overseas, notably in Hong Kong, Cyprus and Dubai”
“… purported trader in deal chains and that had some overall knowledge of the operation of the OCG”
“The principal role of these defendants is said to have consisted in the creation of the false paper trail upon which the ultimate purchaser could rely to show that his trade was legitimate at the same time as facilitating the fraud. In addition, RK in particular is also said to have played a major role in transferring money between bank accounts and in the distribution of the proceeds of the fraud.”
“… after the defence had sought clarification of the prosecution case by way of a series of written questions eliciting written answers, this exchange took place between myself and Mr Hughes [counsel for the prosecution]: “Judge: It is not your case that the missing trader ever purchases or makes payment from a bank account for alcohol which then goes down the chain? Mr Hughes: No Judge: Is it your case that the only entity which receives and pays for a quantity of alcohol is the cash and carry? Mr Hughes: Indeed; the end purchaser.” … Based on the revised prosecution case that the transactions between the missing traders and the buffers are on paper only, the defence submits that the transactions between them are purely fictitious, or a sham, and asks the prosecution to identify the statutory provision which makes a sham supply a taxable supply.” “Judge: It is not your case that the missing trader ever purchases or makes payment from a bank account for alcohol which then goes down the chain? Mr Hughes: No Judge: Is it your case that the only entity which receives and pays for a quantity of alcohol is the cash and carry? Mr Hughes: Indeed; the end purchaser.”
“1. This case is about fraud and the relentless and dishonest evasion of tax. These defendants organised and operated a scam designed to manipulate the VAT system by the creation of bogus paperwork suggesting that alcohol had been bought and sold through a series of companies before ending up in the hands of the first defendant Shafqat Majeed. The truth of it was that there was no real business or competitive trade being carried on. The supply chain had been artificially created for the purposes of the fraud. The identities of innocent people were stolen to set up companies which were centrally controlled and existed simply to service the fraud, which resulted in a loss to the Revenue of approximately£4.8 million . The evidence reveals that another purpose of the creation of the fake supply chain was to disguise the origin of the alcohol. It had not been bought and sold on the legitimate market, rather it had been smuggled into the UK from the Continent, so evading the tax, or duty, which was due to the Revenue.”
“12. The prosecution say that SCW, through its various identities, was the pivot in the supply chain. It acquired its stock from the illegitimate and sold onto the legitimate wholesale market in the guise of M&O. Its role in the fraud is crystallised in its VAT returns. On the one hand it genuinely charged and accounted for its output tax on its supplies to M&O; on the other hand, it falsely claimed it had paid input tax to its various ‘suppliers’. That meant that by off-setting the input tax against the output tax, SCW had a very small VAT bill to pay to HMRC. … For example, for the quarter-end June 2012 the bogus supply chain accounts for£1.39 million input tax out of a total of£1.69 million ). 13. The Jury Bundle sets out the input tax which SCW claimed it had paid on its purchases from its suppliers …. The two principal companies are firstly Nugents and Selections Ltd which purportedly operated from the end of 2011 into the first quarter of 2012 and then Beetrade Ltd which took over up until the date of the first arrests which was 12 December 20102. Between them they purportedly supplied SCW/Palace with alcohol worth over£20 million with input tax totalling over£4 million .”
“30. In April 2012 a local HMRC compliance officer visited the Warrington address [of Beetrade]. It appeared to be abandoned. He therefore wrote an enquiring letter to the director at that address. A fortnight later the officer received an answerphone message at work from someone calling herself Emily Parker asking about Beetrade’s VAT registration. She rang again later from a withheld number but the officer said he couldn’t discuss the company’s business with her as she was not satisfied as to who she was. A minor detail you may think. But remember that name, Emily Parker. The prosecution say that Emily Parker was a pseudonym for Clare Hill, the second defendant. Clare Hill was in a relationship with Shafqat Majeed of M&O. Emily Parker rang into HMRC’s Helpline purporting to be acting on behalf of several companies in SCW’s supply chain: Beetrade, Nugents, Fun Fluid, Chelsea Wine and Whiskey and Nisa International, each time claiming to be the company secretary. HMRC wrote to Beetrade on11 April 2012 informing them that the company had been deregistered for VAT. A week later Emily Parker (Clare Hill) rang the Helpline and said that they had not received the letter. The telephone number she provided to HMRC for Beetrade was unregistered. It appears from notes Clare Hill’s diary that M62’s registration was reinstated later in April 2012.”
“South Coast Wholesale would ultimately be taking, as I say, first hands on if you like of those goods when they entered the United Kingdom and then moving on to M&O, the various outlets to be sold.”
“53. The manufacture of false invoices, which facilitated the commission of the VAT fraud, had another purpose. SCW, the pivot company of the VAT fraud, did actually sell alcohol onto M&O, Shafqat Majeed’s company, which in turn sold it on through its various retail outlets on the South Coast. Where did SCW itself obtain the alcohol which it sold to M&O? On the face of the paperwork, from Nugents and Beetrade as part of the supply chain network. But you know that that network was a fiction; the companies were all centrally controlled with fake invoices used to create the pretence that SCW paid 20% VAT on each purchase. There were no actual sales and purchases and SCW did not buy alcohol from Nugents and Beetrade. The prosecution say that SCW got its stock from supplies which were smuggled into the UK in lorries evading the payment of alcohol duty. The same false paperwork which supported the claims to set-off input tax which was not in fact paid also served as cover to deceive HMRC into believing that the alcohol had been bought on the legitimate duty paid market. Shafqat Majeed was in charge of the operation which was supervised on a day to day basis by the others who are charged on count 2.”
“When questioned Mr Malde stated that the person he contacts is a Mr Janczac, he has not had any problems from the company and as far as he is aware the company sends all the stock that he has purchased from their account in the Belgium Bonded warehouse – Jacobson and Koch. Mr Malde provided copies of his bank statement showing payments made to Sintra SA, his supplier of the goods. They are large amounts of payments made and he does not pay each invoice but each payment on the statement relates to several invoices.”
“… at December 2013, from my understanding, Sintra SA didn’t exist, so there could not be a director.”
“No, we had records of who we dealt with who was running it, but none of our customers or suppliers did we ever ask for directors’ details, because if anyone ever asked me for my details and copies of my passports and home address details, I used to tell them to go, where to go, “you’re not getting it.”
“… to make enquiries into the Value Added Tax status of your business. We have reason to believe that under-declarations of Value Added Tax have occurred and this may be the result of dishonest conduct. I enclose Public Notice 160 for your benefit this details the procedure will use in this type of enquiry. It also explains your rights. Please read it carefully. The enquiry will be conducted with a view to the recovery of tax arrears and interest, and, if there is sufficient evidence of dishonest conduct, the imposition of a Civil Evasion Penalty. The enquiry will not be conducted with a view to your prosecution. Please be aware that as I suspect that dishonest conduct has occurred relation to you or your businesses tax affairs I will want to meet with you personally as described in the attached Public Notice 160. I would like to meet with you at [HMRC’s office on Leeds] on15 October 2015 at 10:30 hours to discuss these matters. Your advisor, if you have one, is also welcome to attend. At the meeting I will explain the procedure outlined in Public Notice 160 and you will be invited to make a full disclosure of any irregularities. It also likely that I will need to ask you some questions about your business and areas linked to our suspicions My colleague Mr. Foster will be present at the meeting … Whilst attending this meeting may have benefit for you, as outlined in the Public Notice 160, you should be fully aware that this does not mean that you are obliged to co-operate with our enquiries. It is up to you to decide whether or not to speak to us or assist us generally in our enquiries. If you do speak to us we may use what you say, or any information you provide, in assessing your liability to tax or a penalty or in any Tribunal proceedings.”
“If we identify irregularities due to conduct involving dishonesty, a civil evasion penalty will normally be applied. If we identify irregularities due to deliberate behaviour we will normally apply a deliberate penalty or a deliberate and concealed penalty. We will normally ask you and your professional adviser, if you have one, to attend a meeting with us. Please tell us in advance if you need an interpreter or have any special needs so that we can take these into account when we prepare for the meeting. We will tell you: • the check is not being conducted with a view to prosecution in relation to the matters that are subject of our check. • the matters that are subject of the check. This means that the behaviour(s) and period(s) under enquiry, rather than the specific information we hold that gives rise to a suspicion of dishonesty or deliberate behaviour. You will have an opportunity to disclose any irregularities or matters in relation to your tax affairs. We will: • listen to any explanations that you or your professional advisers give and, • keep an open mind to the possibility that there may be an innocent explanation for the suspected irregularities.” • the check is not being conducted with a view to prosecution in relation to the matters that are subject of our check. • the matters that are subject of the check. This means that the behaviour(s) and period(s) under enquiry, rather than the specific information we hold that gives rise to a suspicion of dishonesty or deliberate behaviour. • listen to any explanations that you or your professional advisers give and, • keep an open mind to the possibility that there may be an innocent explanation for the suspected irregularities.”
“… so you asked the officers to, to take you through the affidavit and point you to the evidence that they think support HMRC’s case that there was trading by Sintra SA in the UK. The officers will not go into that detail today and they note that you have made your point on the tape, made your case, your view of what (inaudible) is there is clearly a difference of opinion. They, they do not think that today is the forum for you to trawl through the detail of that evidence, than the purpose of today is to consider whether and (inaudible) to the penalty which should be opposed (sic) on the company and/or personally on Mr Malde, and for that purpose they just wish to go through and confirm some of the information that they have. We note the objections are in place, we could sit here for another two hours and, go round in circles on that you are welcome to say (inaudible) tape when I’ve finished speaking if you want to, but what the others propose is that we, we go back to the set of questions that are prepared for today. They’ve asked me to point out to you that (inaudible) some of the information they have has changed, for example I think you previously said that you had no involvement with SA at all and weren’t a Director, but obviously you today have said that you were involved as a director on the setting up of the company right at the outset (inaudible) so on the basis that some information has changed we feel that it’s appropriate and arguably in your interest as well that they go through the information that they’ve got, verify it with you and give you an opportunity to comment on it.”
“… immediately once he’d set up the company [he] handed it over to the parties that were in the business. So in all practical terms he’s accepted he signed it, he put the word, he put his name next to the word director but in all practical terms he was never a director of that company. … he never traded as that company.”
“… looking at it it’s commissions that are paid to me”
“Yes, and you can see why the accountant has resulted in a£47 difference, and that is because he has used internal adjustments to get to that figure, he’s used credit notes, he’s used internal invoices. It’s a reconciliation that I am sure you could get to if you were to allow for movements within the records that don’t impact on the customer.”
“I knew the cashbook existed, and I had examined the cashbook - we are obviously going to come on to that, and I had concerns, let’s put it that way, of the amounts that were being recorded in the cashbook, so I didn’t refer to this because I didn’t know whether it was accurate but I do accept that those two amounts that have been allocated on the bank statements add up to the 130[,000] and the transaction numbers match them too, but when I was writing this I was starting the process of thinking, “Okay, where is this money coming from? How is it first recorded?” so I was starting from the bank statements as the first “event” if you like that happened.”
“It appears that the businesses operated by Mr Malde are a facade created for the purpose of facilitating and undertaking the fraudulent evasion of taxes properly due to HMRC. … The evasion of taxes by Mr Malde is on a very substantial scale and is believed to involve the evasion of VAT in the sum of at least£20,670,728 by reason of which HMRC are also intending to raise penalties against Mr Malde personally in the sum of at least£8,698,037 . … … the evidence shows that Mr Malde operates the fraud through various corporate entities but when HMRC subject one of those companies to careful scrutiny Mr Malde closes that company down and moves its assets and operations into another company he has set up in order to perpetuate the fraud.” … In my view, Mr Malde has been a knowing participant in the fraudulent evasion of taxes due to HMRC on a large scale using various corporate entities, and over a significant period of time.”
“Mr Malde has set up a complex web of companies to perpetrate the alcohol diversion fraud. His involvement in the central pillars of these [sic] fraud namely Sintra [SA] and Sintra Global, Corkteck, Park Royal, Brunel Freight and Anpa reflects dishonesty on his part.”
“Mr Malde has shown scant regard for his legal obligations to account for taxes on the sales of alcohol derived from the activities of the Sintra entities by both failing, to register for VAT, declare and pay excise duty and by failing produce and submit annual accounts and to account for Corporation Tax on any of the profits derived from the operation of the Sintra companies.”
“Mr Malde was in control of both Sintra entities and also Corkteck. Corkteck was utilised only when a load was stopped and that load then became the cover load. Any loads that got through undetected were effectively smuggles by Sintra. They may or may not have gone anywhere near Corkteck’s premises.”
“Parul K Malde Schedule of VAT arrears”
“Gross value of onward sales by Parul K Malde.”
“At the AOT I & James [Dibb] mentioned re£29.7m worth of sales between York Wines, Sintra, Galac & Golden Apple. We know from Op Rust that any trade between these companies is fraudulent and we can link Malde to these through his connection with Sintra. I am therefore looking to raise assessments on the VAT due on these sales due to them being mirror loads. Firstly, could you please check whether any time restrictions apply to the years we can raise assessments for bearing in mind that Cl [Criminal Investigations] are going to be coming on board and that these transactions are part of a proven fraud. Secondly, calculate what VAT is due & for what years. Your help is greatly appreciated.”
“I think we’re going to be out of time for the assessments anyway”
“If possible by19 July 2013 but if any delays keep me updated. I hope it isn’t out of date. Can you look into it further especially as it is deliberate fraud.”
“we are trying to establish if the business between Sintra & Corkteck mainly took place in the UK, if so then we will bring Sintra into the UK for tax purposes and look at charging CT, SA & VAT.”
“15.2 HMRC have produced no evidence that either [SA] or [Global] illegally imported goods into the UK. All the records examined indicate [SA] and [Global] in the main traded outside the UK. They did sell non-alcoholic goods to UK traders but as intra community supplies these goods did not attract VAT. For example, Pride Oil to Best Buys. HMRC appear to have made an unsupported assumption that Sintra SA or Sintra Global smuggled alcohol into the UK and sold it at ‘slaughter sites’. The civil standard of evidence required by a Tribunal testing this approach is ‘on the balance of probability’. Using ‘best judgment’ HMRC have relied on the trading records of YW [York Wines] to determine the value of alcohol it sold to [SA]. The director of YW, Kevin Burrage, was convicted of Excise duty fraud in 2012 and the company records were discredited during that trial. Here those same records form the cornerstone of HMRC’s case. In DF’s [Mr Foster’s] affidavit paragraph 15 HMRC explain that they rely on the Sage prints from YW obtained during Operation Rust. That investigation was conducted in 2008 and the question arises at what stage HMRC had sufficient evidence using ‘best judgement; to raise an assessment. 15.4. HMRC have assumed that all the declared imports of alcohol by Corkteck are ‘cover loads’. When these assumptions have been tested by the Magistrates or Crown Court HMRC’s assumptions have been found to be incorrect.”
“… took them as being accurate and that’s the exercises that have been undertaken since then and have shown that they are accurate.”
“Not necessarily, no. As I said, there was a large team of people working on the case. I wasn’t the lead case officer on the case. Helen Hill was, so it’s possible that somebody else on the team may have looked at this themselves but I don't believe that I did personally, no.”
“I did discuss it with my peers and line management and it was felt that a best judgment excise assessment could be issued on the basis of the VAT assessment. It is not the way that we would do it if we had the actual sales invoices or sales records, but I was advised that the excise assessment could be based on the sales figures and this would be a best judgment based on the [VAT] Specialist Investigation case.”
“(1) The Appellant did not trade in the UK. It is a company registered in Panama with offices in Poland and Malaysia. (2) The assessment is out of time. HMRC had evidence of facts sufficient to raise an assessment in 2012.They failed to do so within the 12 month period required. The time limits for VAT assessments are found in theVAT Act 1994 section 73 (6)(b) & section 77 andFinance Act 2008 , Schedule 39, paragraph 34.”
“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 [VATA], 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) Section 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 [counsel for the Appellant] relied on ‘the presumption of innocence’ underart 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 Rezvi[2002] UKHL 1 ,[2003] 1 AC 1099 ,[2002] 1 All ER 801 , 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 section 76(5) (allowing combination in one assessment). It would be surprising if the Act required different rules to be applied in each case. (v) Section 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 section 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.” (i) It is the Appellant who knows, or ought to know, the true facts. (ii) Section 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 [counsel for the Appellant] relied on ‘the presumption of innocence’ underart 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 Rezvi[2002] UKHL 1 ,[2003] 1 AC 1099 ,[2002] 1 All ER 801 , 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 section 76(5) (allowing combination in one assessment). It would be surprising if the Act required different rules to be applied in each case. (v) Section 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 section 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 is no necessary connection between the seriousness of an allegation and the improbability that it has taken place. The test is the balance of probabilities, nothing more and nothing less.”
“They conceive a certain theory, and everything has to fit into that theory. If one little fact will not fit it, they throw it aside. But it is always the little facts which will not fit in that are significant.”
“Perhaps the clearest evidence of the destination of the alcohol supplied by Global are the payments received from its customers. Putting to one side the funds received from Adrena, which are alleged to relate to the cover loads and which supplies are accepted to have occurred in the EU, Global received substantial sums from the following UK incorporated companies: Ramstrad; Alexsis; Hobbs; Corkteck; Best Buys; Sea Inn Foods; and Universe. It is the Respondents’ case that those payments represent the flow of funds to Global in relation to the alcohol it had supplied, which had eventually been slaughtered in the United Kingdom. The Appellants do not challenge that suggestion, which seems likely, from the evidence before the Tribunal. However, the crucial issue is the location of the supplies of alcohol for which payment was made.”
“… moving on now from the SA period to the Global period – when there were seizures during the Global period, the claim to ownership of the seized goods did not come from a another entity, it came in each case from Adrena, which, as you know, it is HMRC’s case is effectively a company that is controlled by Global, and hence by Mr Malde. So, the proof of the pudding is in the eating. If, as sometimes happens, goods smuggled do not make it in and they are intercepted and then seized, surely one would expect to see the owner of the goods come forward and seek their return? In the earlier period it was always SA, and in the later period it was always Adrena, for the simple reason that Adrena was being used for the purposes of the cover loads.”
“A civil evasion penalty is a sanction for dishonest conduct, rather than for failure to pay tax which is due. Hence, a penalty may be imposed even if no tax has been lost. This is clear from s 60(3)(a) with the words ‘(if any)’, and from s 70(4)(b) which deals with mitigation, and has the effect that it is not relevant by way of mitigation that no or no substantial amount of tax has been lost, and indeed from s 60(1) itself with its words ‘or sought to be evaded’”
“On this appeal the question of the relationship between the two sets of provisions is directly in point. Clearly, as Carnwath LJ said, there are links. Equally clearly a tax assessment cannot be ‘reopened’, in the sense of liability for tax being put again in issue, just because a penalty assessment is made, unless circumstances such as those mentioned in s 73(6)(b) exist in which an additional assessment to tax can be made. It is also clear that, although tax and penalty assessments may be made simultaneously, or at much the same time, and may be appealed together, they can also be made separately and successively, being the subject of quite different time limits, and may be appealed separately and in succession.”
“There is no express provision in the 1994 Act [VATA] which links the amount of tax evaded, for the purposes of s 60, to the amount of tax found to be due, upon a return (if any), an assessment and (if there is one) an appeal.”
“… it is important to come to a conclusion as to what are the obligations placed on the commissioners in order properly to come to a view as to the amount of tax due, to the best of their judgment. As to this the very use of the word “judgment” makes it clear that the commissioners are required to make a value judgment on the material which is before them. Clearly they must perform that function honestly and bona fide. It would be a misuse of power if the commissioners were to decide on a figure which they knew was, or thought was, in excess of the amount which could possibly be payable, and then leave it to the taxpayer to seek on appeal to reduce that assessment. Secondly, there must be some material before the commissioners on which they can base their judgment. If there is no material at all it would be impossible to form a judgment as to what tax is due. Thirdly, it should be recognised, particularly bearing in mind the primary obligation, to which I have made reference, of the taxpayer to make a return himself, that the commissioners should not be required to do the work of the taxpayer in order to form a conclusion as to the amount of tax which, to the best of their judgment, is due. In the very nature of things frequently the relevant information will be readily available to the taxpayer, but it will be very difficult for the commissioners to obtain that information without carrying out exhaustive investigations. In my view, the use of the words “best of their judgment” does not envisage the burden being placed on the commissioners of carrying out exhaustive investigations. What the words “best of their judgment” envisage, in my view, is that the commissioners will fairly consider all material placed before them and, on that material, come to a decision which is reasonable and not arbitrary as to the amount of tax which is due. As long as there is some material on which the commissioners can reasonably act then they are not required to carry investigations which may or may not result in further material being placed before them.”
“In my view, the Tribunal, faced with a ‘best of their judgment’ challenge, should not automatically treat it as an appeal against the assessment as such, rather than against the amount. Even if the process of assessment is found defective in some respect applying the Rahman (2) test, the question remains whether the defect is so serious or fundamental that justice requires the whole assessment to be set aside, or whether justice can be done simply by correcting the amount to what the tribunal finds to be a fair figure on the evidence before it. In the latter case, the tribunal is not required to treat the assessment as a nullity, but should amend it accordingly.”
“For my part, I would accept that an assessment made on behalf of the Commissioners by an officer who had, consciously or unconsciously, ‘closed his mind’ to any material which did not fit his case, would not be an assessment of an amount due to the best of their judgment. The exercise of judgment, based on the evaluation of material, requires that the task be approached with an open mind. That does not, of course, mean that the officer is required to accept all that the taxpayer tells him; or to accept that all of the material that the taxpayer produces is genuine. As Carnwath LJ has observed, in the present case the Commissioners were entitled to be highly sceptical of information coming from a convicted fraudster. The officer is entitled to reject material on the basis that, on evaluation, he does not regard it as credible; but he must not reject material on the basis that, before evaluation, he has closed his mind to the possibility that it might be credible.”