Jade Lambert v The Commissioners for HMRC [2025] UKFTT 1115 (TC)

[2025] UKFTT 01115 (TC)Case No TC09641
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 27 August 2025Date Judgment date: 16 September 2025
Taylor House, London
Appeal reference: TC/2024/00510
Application to strike out appeal – Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 rule 8(3)(c) – grounds of appeal sought to re-litigate matters previously determined on an appeal by the company of which the Appellant is the sole director –Hackett, Trees and Booth decisions considered and applied – abuse of Tribunal’s process and no reasonable prospect of success – further grounds based on mental health and inability to pay also had no reasonable prospect of success – application granted
Before
TRIBUNAL JUDGE RACHEL GAUKE
Between
JADE LAMBERTAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentJames Puzey of counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs for Respondents for The Appellant did not attend and was not represented.DECISION

Introduction

[1]This decision concerns an application by the Respondents (HMRC) for a direction under Rule 8(3)(c) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (the “FTT Rules”) to strike out the appeal by the Appellant (Mr Jade Lambert) on the grounds that the case has no reasonable prospect of success and/or amounts to an abuse of the Tribunal’s process.[2]For the reasons given below, I grant HMRC’s application and strike out the appeal.

The failure to attend

[3]The hearing was listed to take place on Wednesday 27 August 2025, beginning at 10.30am. Mr Lambert did not attend at this time, nor did a representative attend on his behalf. The Tribunal clerk emailed him at the email address provided in his notice of appeal, but by the conclusion of the hearing had received no reply. The notice of appeal did not include a telephone number for Mr Lambert. The correspondence within the hearing bundle included a letter from Mr Lambert’s GP containing two telephone numbers which purported to be for Mr Lambert; the Tribunal clerk called both of these numbers but the calls were not answered.[4]Under Rule 33 of the FTT Rules, if a party fails to attend a hearing, the Tribunal may proceed in their absence if the Tribunal is satisfied that the party has been notified of the hearing or that reasonable steps have been taken to notify them, and considers that it is in the interests of justice to proceed with the hearing.[5]After the hearing had ended, I confirmed that the Tribunal had sent Mr Lambert a “Notice of Hearing”. This was sent on 10 March 2025, to the email address provided in Mr Lambert’s notice of appeal. This gave the date of the hearing of the strike-out application as 27 August 2025, and included the information that “if you do not attend, the Tribunal may decide the matter in your absence”.[6]Mr Lambert had emailed the Tribunal on 28 February 2025, using the same email address that was subsequently used by the Tribunal to send the Notice of Hearing, stating that he was available to attend a hearing on 26-27 August 2025 or 24-26 September 2025. He should therefore have been aware that the hearing was likely to be arranged for one of these dates.[7]He was also copied in to various emails sent to the Tribunal by HMRC in the days running up to the hearing. This included an email dated 20 August 2025 attaching the authorities bundle, in which HMRC noted that Mr Lambert had failed to provide a skeleton argument and expressly referred to “the upcoming hearing on 27 August 2025”.[8]I am therefore satisfied that Mr Lambert was notified of the appeal or that reasonable steps were taken to notify him.[9]I considered whether it was in the interests of justice to proceed. Rule 2(2) of the FTT Rules says:
“Dealing with a case fairly and justly includes-- (a) dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties; (b) avoiding unnecessary formality and seeking flexibility in the proceedings; (c) ensuring, so far as practicable, that the parties are able to participate fully in the proceedings; (d) using any special expertise of the Tribunal effectively; and (e) avoiding delay, so far as compatible with proper consideration of the issues.”
[10]The relevant factors here are (a), (c) and (e).[11]In relation to (a), HMRC had sent Mr Puzey to the hearing, and if the appeal was not heard, his time and the related costs would be wasted.[12]In relation to (c), the lack of a representative means that Mr Lambert could not put forward oral submissions. But I had his grounds of appeal and his objection to the application for the appeal to be struck out. Mr Lambert failed to comply with a Tribunal direction that he should provide a skeleton argument not later than 21 days before the hearing, so I did not have the benefit of that skeleton argument. However, in the absence of an explanation from Mr Lambert as to why he had failed to comply with this direction, I did not consider that this was a factor that should weigh in his favour.[13]In relation to (e), postponing the appeal would inevitably cause delay for the parties in this case, and would be likely to cause delay to other court users.[14]I had a hearing bundle containing (in addition to, as already mentioned, Mr Lambert’s grounds of appeal and his objection to the strike-out application): Tribunal directions; HMRC’s application to strike out; correspondence between the parties including HMRC’s penalty explanation letter and the personal liability notice; a note of a telephone conversation between Mr Lambert and an HMRC officer; a letter from Mr Lambert’s GP; and other relevant documentation. I also had a bundle of authorities, HMRC’s skeleton argument and two additional case law authorities provided by HMRC. In my judgment I had sufficient information properly to consider the application.[15]I was mindful that the appeal concerns a large sum of money, and that the Tribunal had categorised the case as “complex”, but these factors are not sufficient to require me to direct an adjournment, particularly in a situation where Mr Lambert had neither requested an adjournment nor explained to the Tribunal why he had failed to attend the hearing.[16]I therefore decided that it was in the interests of justice to continue with the hearing in Mr Lambert’s absence. Mr Lambert is entitled under Rule 38 of the FTT Rules to apply for this decision to be set aside and for his appeal to be reinstated. Such an application would be granted only if it were just in all the circumstances so to do. I would also refer Mr Lambert, in this context, to my comments at paragraphs [71] to [75] below concerning the possibility of applying to amend his grounds of appeal.[17]If Mr Lambert wishes to apply for this decision to be set aside, he must make this application to the Tribunal in writing so that it is received within 28 days after the date this decision is sent to him.[18]Alternatively Mr Lambert may apply for permission to appeal this decision to the Upper Tribunal: see paragraph [77] below.

Background

[19]Mr Lambert appealed against a personal liability notice (“PLN”) issued to him by HMRC on 7 September 2023 under paragraph 19(1) of Schedule 24 to the Finance Act 2007 (“FA 2007”). The PLN was in the amount of £1,553,050.[20]The background to the issue of the PLN can be summarised as follows.(1) Mr Lambert was the sole director of Fulfillment Logistics UK Ltd (“FLUK”). On 20 February 2019, HMRC issued a decision denying FLUK the right to deduct input tax of £1,011,973 on the purchase of imported contact lenses in VAT periods 10/13 to 10/18 inclusive. HMRC’s grounds were that these transactions were connected with the fraudulent evasion of VAT by Contactlenses Ltd (“CLL”), FLUK’s customer, and FLUK actually knew or should have known of that fact. Therefore, according to HMRC, FLUK’s right to deduct input tax could be denied under the principles set out by the Court of Justice of the European Union in Axel Kittel v Belgium Case C-439/04 (“Kittel”).(2) Also on 20 February 2019, HMRC issued a decision to assess FLUK for £293,775 of output tax on supplies of services to CLL during VAT periods 10/13 and 04/17 to 10/18 inclusive, on the grounds that FLUK’s customer, CLL, had a fixed establishment in the UK.(3) FLUK appealed those decisions to this Tribunal. The appeal was heard over four days in June 2022, with Mr Lambert giving evidence as the sole witness for FLUK. The Tribunal’s decision, issued on 13 November 2022, was to dismiss FLUK’s appeals. The decision is reported at Fulfillment Logistics UK Ltd v HMRC [2023] UKFTT 131 (TC) (“Fulfillment Logistics”). FLUK did not appeal this decision.(4) Certain findings of the Tribunal in Fulfillment Logistics that are relevant to this application are set out in the Appendix below.(5) On 7 September 2024, HMRC issued FLUK with a penalty assessment under FA 2007, Sch 24 in respect of the inaccuracies in the VAT returns for the periods in which the relevant transactions took place (i.e. the transactions that were considered by the Tribunal in Fulfillment Logistics).(6) The penalty was in the amount of £1,533,000. This was calculated on the basis that the potential lost revenue was £1,764,830, which HMRC say is the combined total of the VAT assessments and adjustments to VAT returns made as a result of their decisions on 20 February 2019. The penalty was calculated at 88% of the potential lost revenue, on the grounds that the behaviour giving rise to the inaccuracies was deliberate and concealed, and the disclosure of the inaccuracies to HMRC was prompted. A penalty reduction was given for the quality of disclosure, but HMRC did not consider that there were any special circumstances.(7) Also on 7 September 2024, HMRC issued Mr Lambert with a PLN for the full amount of the penalty, on the basis that the underlying deliberate behaviour was attributable to Mr Lambert’s actions as an officer of FLUK.(8) FLUK did not appeal against the decision to issue the penalty, but Mr Lambert sought a review of the decision to issue the PLN. HMRC’s reviewing officer upheld the PLN and Mr Lambert appealed, on 30 January 2024, to the Tribunal.[21]Mr Lambert’s grounds of appeal were as follows:(1) My behaviour was neither deliberate nor concealed, as is claimed. I did not know about the alleged fraud that was claimed.(2) All VAT returns submitted were done so in the belief that there were no inaccuracies.(3) I am being unfairly held accountable for actions that I have been wrongly accused of, and as such I am appealing against the decision to hold me accountable for the VAT penalty issued to the company of which I was the sole director.(4) The relentless persecution I have faced under the guise of these false accusations has had an immense human impact, including causing ongoing mental distress, notification of which HMRC has received from my GP.(5) Notwithstanding my innocence, the level of the penalty is such that it is non-sensical that it even be considered to be assigned to me personally, as it would be, even before the ruinous effects of HMRC’s unfettered actions, simply impossible for me to meet.[22]On 17 May 2024, HMRC applied to strike out grounds 1 to 3 above on the basis that they amounted to an abuse of process, because they were seeking to re-litigate matters that had already been decided by the Tribunal, and so had no reasonable prospect of success. HMRC also sought to strike out grounds 4 and 5, on the basis that they were unarguable and so they, too, had no reasonable prospect of success.[23]On 23 August 2024, Mr Lambert responded to HMRC’s application. He argued as follows:(1) The Appellant’s appeal does not represent an abuse of the Tribunals process given that the previous FTT process, to which the Respondents’ reference as points (i)-(iii) of the Grounds of Appeal seeking to re-litigate, was in respect of the Company, Fulfillment Logistics UK Limited, as stated on the cover page of the document provided by the Respondents as “Annex A” of their Application. The Appellant’s appeal is in respect of the Appellant as an Individual.(2) The “European Convention on Human Rights – Article 6” sets out that “everyone is entitled to a fair and public hearing” which the Appellant, as an Individual, has yet to receive.(3) Whilst the Respondents may seek to dismiss points (iv) and (v) of the Grounds of Appeal as unarguable, illness relating to my mental health as highlighted at point (iv) must be held in consideration in accordance with the “Equality Act 2010”.(4) The Appellant’s Arguments For Dismissal Of Respondents’ Application demonstrate that the Appellant’s Grounds of Appeal is not an abuse of the FTT’s process as they do not seek to re-litigate issues previously determined by the FTT, as that FTT process related to another Appellant, but seek to ensure that the Appellant receives what is entitled to “everyone” under the “European Convention on Human Rights – Article 6”.(5) Nor should the matter of mental health illness not be held in consideration by simply labelling it as “unarguable”, which could be considered to contravene the “Equality Act 2010”. Accordingly, the Appellant seeks that the FTT dismisses the Respondents’ application for Direction for the Appellant’s Grounds of Appeal to be struck out and that the Appellant’s appeal proceeds.

Relevant law: strike-out applications

[24]Rule 8(3) of the FTT Rules provides, so far as material:
“(3) The Tribunal may strike out the whole or a part of the proceedings if- […] (c) the Tribunal considers there is no reasonable prospect of the appellant's case, or part of it, succeeding.”
[25]When considering an application to strike out proceedings under Rule 8, it is necessary to bear in mind the overriding objective of the FTT Rules. The overriding objective is set out in Rule 2, and is to enable to Tribunal to deal with cases fairly and justly. Dealing with a case fairly and justly includes the matters in Rule 2(2), which I have set out above.[26]The Upper Tribunal in The First De Sales Limited Partnership and others v HMRC [2018] UKUT 396 (TCC) (“First De Sales”) at [33] provides helpful guidance in relation to strike out applications: "Although the summary in Fairford Group Plc is very helpful, we prefer to apply the more detailed statement of principles in respect of application for summary judgment set out by Lewison J, as he then was, in Easyair Ltd (t/a Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15]. This was subsequently approved by the Court of Appeal in AC Ward & Sons v Caitlin Five Limited [2009] EWCA Civ 1098. The parties to this appeal did not suggest that any of these principles were inapplicable to strike out applications. "i) The court must consider whether the claimant has a 'realistic' as opposed to a ‘fanciful’ prospect of success: Swain v Hillman [2001] 1 All ER 91 ii) A 'realistic' claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8] iii) In reaching its conclusion the court must not conduct a 'mini-trial': Swain v Hillman iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10] v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550 vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63 vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725."”[27]The Upper Tribunal continued at [74]:
“The issue concerning section 225 ITEPA 2003 gave rise to a short point of construction. The FTT, correctly in our judgment, was satisfied that it had before it all the evidence necessary for the proper determination of the question and that the parties had an adequate opportunity to address it in argument. The Appellants' evidential case was, in our view, hopeless, based on the evidence before the FTT. The FTT was right to conclude it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction.”
[28]In Shiner and another v HMRC [2018] EWCA Civ 31 ("Shiner"), the Court of Appeal held that the Tribunal has the power to strike out appeals which amount to an abuse of process. Patten LJ said at [19]:
“The need to exercise caution in relation to any power to strike out proceedings prior to a full hearing is obvious. But it is a consideration which goes to the exercise of the power rather than to whether such a power exists. The Upper Tribunal in its decision at [55] did not take Mr McDonnell to have submitted that there was no power to strike out for abuse of process but in any event, in my view, the power contained in Rule 8(3)(c) is wide enough in its terms to include a strike out application based on those grounds. Such an application, if successful, would result in the First-tier Tribunal concluding that the relevant part of the appellant's case could not succeed…”

Relevant law: personal liability notices

[29]FA 2007, Sch 24 provides for penalties to be payable where a person submits certain categories of document, including a VAT return, to HMRC, and that document contains an inaccuracy that fulfils certain criteria. The amount of the penalty is a percentage of the “potential lost revenue” (broadly, the additional tax due as a result of correcting the inaccuracy). The percentage depends on a number of factors including whether the inaccuracy was careless or deliberate, and if deliberate, whether it was also concealed. Penalty reductions apply for quality of disclosure (or “telling, helping and giving”), meaning broadly how much assistance the taxpayer gave to HMRC in relation to the matter giving rise to the penalty. HMRC also have the power to reduce a penalty if they think it is right to do so because of special circumstances.[30]The provision giving HMRC the power to issue PLNs in relation to inaccuracy penalties is at FA 2007, Sch 24, para 19. This provides so far as relevant:
“19 (1) Where a penalty under paragraph 1 is payable by a company for a deliberate inaccuracy which was attributable to an officer of the company, the officer is liable to pay such portion of the penalty (which may be 100%) as HMRC may specify by written notice to the officer. (2) Sub-paragraph (1) does not allow HMRC to recover more than 100% of a penalty. (3) In the application of sub-paragraph (1) to a body corporate other than a limited liability partnership “officer” means— (a) a director (including a shadow director within the meaning of section 251 of the Companies Act 2006 (c 46)), (aa) a manager, and (b) a secretary.” (a) a director (including a shadow director within the meaning of section 251 of the Companies Act 2006 (c 46)), (aa) a manager, and (b) a secretary.”
[31]Where a person is required to pay an amount under a PLN, FA 2007, Sch 24, para 19(5)(e) has the effect that the rules about appealing against a penalty apply as if that person had been required to pay a penalty of that amount.

Hackett

[32]Lindsay Hackett v HMRC [2016] UKFTT 781 (TC) (“Hackett”) is a previous decision by this Tribunal on an appeal against a PLN by a company director in circumstances where, as here, there had been a previous Tribunal decision on an appeal by the company on the matter giving rise to the penalty.[33]Mr Hackett was the sole director of a company called Intekx Ltd (“Intekx”). HMRC denied Intekx repayment of input VAT on the basis that Intekx’s transactions were connected to fraudulent evasion of VAT and Intekx knew, or should have known, that this was the case. Intekx made separate appeals to the Tribunal in respect of the input tax denials for different VAT periods. In the first such appeal, for the VAT period 09/06, the Tribunal held that Intekx knew its deals were connected with fraud, and so dismissed the appeal (see Intekx Ltd v HMRC [2014] UKFTT 277 (TC)).[34]HMRC subsequently issued Intekx with an inaccuracy penalty, and at the same time sent Mr Hackett a PLN specifying the whole of the penalty as the amount payable by Mr Hackett, on the basis that the deliberate inaccuracy was attributable to him as an officer of the company. Mr Hackett appealed against the PLN, and one of the issues considered by the Tribunal was whether it would be an abuse of process for Mr Hackett to seek to re-litigate issues that had already been settled in the previous appeal by Intekx.[35]The Tribunal found, at [40], that the fact that the penalty appeal was by Mr Hackett and the previous appeal was by a different party (Intekx, the company of which Mr Hackett was the sole director) did not prevent the principle of abuse from applying. The Tribunal stated:
“[40] …The correct approach was that formulated by Sir Robert Megarry V-C in Gleeson v J Wippell & Co Ltd [1977] 1 WLR 510 [“Gleeson”], at p 515, namely that “there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was a party should be binding in proceedings to which the other is a party”. [41] There can be no doubt in this case that Mr Hackett has that sufficient degree of identification with Intekx to enable the principle to be applied in this case. Indeed, there was no serious argument to the contrary. Mr Hackett was the sole director of Intekx at the material time, and it was he who made decisions and gave instructions on its behalf. [42] The question therefore is whether, in all the circumstances, it would be an abuse of process for Mr Hackett to argue in his own appeal against the personal liability notice, and as part of that against the penalty assessed on the company, matters which either were the subject of determination by the tribunal (in respect of the 09/06 period) or in relation to other periods could have been determined by the tribunal had the appeals in those respects not been withdrawn. [43] So far as the 09/06 period is concerned, the relevant issues were the subject of a final determination by the tribunal in Intekx 2014, having considered on a hearing of the substantive appeal all the facts and evidence including the evidence of Mr Hackett. I have no doubt in that respect that it would be an abuse of process for Mr Hackett to seek to re-litigate the relevant issues determined by the tribunal in that appeal. Mr Hackett, in his capacity as director of Intekx, has had an opportunity to put forward his case that in that period there was no connection between the transactions of Intekx in that period and fraudulent evasion of VAT, and that Intekx did not know of any such connection. It would be contrary to the principle of finality of litigation to allow that determination to be re-visited on this appeal. It would be a clear abuse of process to do so, and there are no circumstances that could justify such a course.”
[36]The Tribunal concluded on this point, at [46], that it would be an abuse of process for Mr Hackett to dispute, in that later case, facts and issues determined by the Tribunal in the earlier appeal by Intekx. This aspect of the Tribunal’s decision was not appealed when Hackett proceeded to the Upper Tribunal.[37]In Hackett, the circumstances were different for the other periods under appeal, because for those periods (unlike the 09/06 period) there had not been an earlier Tribunal determination. That is not the case in the present appeal by Mr Lambert, in which all the periods to which the PLN relates were considered in the Tribunal’s previous decision in Fulfillment Logistics.

Trees

[38]Ashley Charles Trees v HMRC [2023] UKFTT 339 (TC) (“Trees”) concerned a VAT civil evasion penalty rather than an inaccuracy penalty, but is relevant here because the Tribunal considered the question of abuse of process where a company director sought to re-litigate facts and issues that had already been decided in a previous appeal by the company.[39]Mr Trees was the sole director of a company called CCA Distribution Ltd (“CCA”). HMRC issued decisions which denied CCA the right to deduct input tax on the basis that the related transactions were connected with the fraudulent evasion of VAT, and that Mr Trees knew, or should have known, of that connection.[40]CCA appealed to the Tribunal. The Tribunal refused the appeal, stating that they were "in no doubt that Mr Trees knew that all of CCA's transactions in the period in question were connected to fraud" (see CCA Distribution Ltd v HMRC [2020] UKFTT 222 (TC)).[41]HMRC subsequently issued CCA with a civil evasion penalty under the Value Added Tax Act 1994 and at the same time issued Mr Trees with a Director’s Liability Notice (“DLN”) for the full amount of the penalty, on the basis that the conduct giving rise to the penalty was wholly attributable to his dishonesty. Mr Trees appealed the DLN, in part on the grounds that he did not know the transactions were connected to fraud. HMRC applied to strike out those parts of his grounds of appeal, on the basis that this had already been decided in the appeal by CCA, and it would be an abuse of process for Mr Trees to re-litigate the same issue.[42]The Tribunal decided (see Trees at [67]) that it would be an abuse of process to allow Mr Trees to appeal the DLN on the basis that he did not know of the connection to fraud. The Tribunal went on to say that, in the previous appeal by the company (CCA):
“[69]…the FTT clearly and unequivocally decided that "Mr Trees knew that all of CCA's transactions in the period in question were connected to fraud", and that conclusion was founded on detailed findings of fact derived from careful examination of the evidence. [70] Mr Trees sought to rely on Lord Bingham's statement that in considering whether there is abuse of process, a court must make "a broad merits-based judgment". While correct, that approach requires me to take into account, not only "the facts of the case" and Mr Trees' interests, but also (a) the interests of HMRC, who should not be "twice vexed in the same matter" and (b) the public interest, which requires "finality in litigation", a principle "reinforced by the current emphasis on efficiency and economy in the conduct of litigation".”
[43]The Tribunal in Trees also took the opportunity to comment on the significance or otherwise of the previous appeal having been made by the company (CCA) rather than by Mr Trees:
“[77] I add for completeness that Mr Trees did not seek to argue that there was no abuse of process because the parties were different: CCA was the appellant in the MTIC appeal and he is the appellant in the DLN appeal. He was right not to take that point. It is clear from Gleeson (approved in Gore Wood) that where the parties are different there can still be abuse of process if there is "a sufficient degree of identity" between the original party and the new appellant. Both parties accepted that CCA was Mr Trees' alter ego, or, as Lord Bingham put it, his "corporate embodiment". CCA 2020 is therefore binding in this new litigation between Mr Trees and HMRC.”

Booth

[44]CF Booth Ltd v HMRC [2022] UKUT 1565 (TCC) (“Booth”) concerned an appeal by a company against a penalty for inaccuracies in VAT returns, in circumstances where the (First-tier) Tribunal had previously decided (in CF Booth Ltd v HMRC [2017] UKFTT 813 (TC)) that the company knew or should have known that a number of its transactions were connected to the fraudulent evasion of VAT. This was not, therefore, a case in which the parties to the penalty appeal were different from the parties to the earlier First-tier Tribunal decision. It is, however, relevant here because the Upper Tribunal considered the extent to which an earlier Tribunal decision on Kittel knowledge determines whether the taxpayer’s conduct was deliberate for the purposes of an inaccuracy penalty.[45]In Booth, the company argued that a finding of dishonesty was an essential element of deliberate inaccuracy for the purposes of the penalty assessment. On this point the Upper Tribunal held:
“[41] We disagree. There is in our judgment no requirement for HMRC to plead or prove dishonesty when seeking to impose a penalty for deliberate inaccuracy under Sch 24 FA 2007. As the FTT held in Auxilium, deliberate inaccuracy occurs when a taxpayer knowingly provides HMRC with a document that contains an error with the intention that HMRC should rely upon it as an accurate document. We do not consider that anything said by the Supreme Court in Tooth calls that test into question.”
[46]The Upper Tribunal’s decision then continues as follows:
“[42] Mr McDonnell [counsel for the appellant company] also submitted that prior to the release of the 2017 Decision the required mental or conscious element in relation to deliberate inaccuracy had not been established. Prior to the 2017 Decision, he said that the position was uncertain or 'inchoate' as regards the Appellant's entitlement to claim input tax. Mr McDonnell also argued that HMRC would need to prove that the Appellant's employee who completed and filed the VAT returns knew that they were inaccurate. [43] We have no hesitation in rejecting those submissions. In the present case, the FTT in the 2017 Decision held that the Appellant knew that its transactions, for which it was claiming input tax and zero-rating, were connected with fraud. Those findings have not been appealed. As the FTT correctly held at [40] of the 2020 Decision, this meant that the Appellant never had any entitlement to an input tax deduction as a result of the application of the Kittel principle. The same must apply in relation to the Appellant's claims for zero-rating of the MGB transactions. Because it knew, before submitting its returns, that its transactions were connected with fraud, the Appellant also knew that it had no entitlement to an input tax deduction or, in relation to the MGB transactions, an entitlement to zero rating. The FTT's 2017 Decision therefore simply identified and confirmed the Appellant's existing state of knowledge – a state of knowledge which disqualified it from any entitlement to an input tax deduction (and to zero rating in respect of the MGB transactions) in the first place. The FTT's decision on this point is, in our view, unimpeachable.”

Discussion

[47]The question I must decide is whether Mr Lambert’s case, as expressed in his grounds of appeal, has no reasonable prospect of success. In making this decision I have considered whether Grounds 1 to 3 constitute an abuse of the Tribunal’s process, because if they do, following the reasoning in Shiner at [19], it follows that they have no reasonable prospect of success.[48]I find that Grounds 1 to 3 seek to re-litigate matters that have already been determined by this Tribunal in the previous decision in Fulfillment Logistics, and are therefore an abuse of the Tribunal’s process.[49]In Ground 1, Mr Lambert states that his behaviour was neither deliberate nor concealed. The sole basis he gives for this statement is that he did not know about the “alleged fraud that was claimed”.[50]Regarding the denial of the input tax deduction, the “alleged fraud” involved the transfer of the contact lens business from CLUK to a company in the Seychelles (CLL) with the intention of evading VAT. The Tribunal in Fulfillment Logistics found, at [235], that:
“We are satisfied that… there was a deliberate scheme to move the Contact Lens Business offshore with a view to evading VAT.”
[51]The Tribunal also found, at [242], that Mr Lambert was CLL’s finance manager, and at [246] held that:
“…we find it inconceivable that Mr Lambert did not know the real reasons for the move to CLL. He went along with the 2007 sale, became the finance manager for CLL and took advice on from The VAT Consultancy in 2013. In all that time we find he would have been told the real reason for the CLL structure.”
[52]Regarding the output tax assessment, the Tribunal found at [341] that the behaviour of FLUK (of which Mr Lambert was the sole director) was “deliberate”, and at [342] held that:
“we are satisfied that Mr Lamber[t] knew the appellant should be charging VAT.”
[53]Based on these findings it is, in my view, clear that the Tribunal in Fulfillment Logistics decided that Mr Lambert did know about the VAT fraud that gave rise to the issue of the penalty assessment, in relation to both the denial of the input tax claim, and the output tax assessment. By Ground 1, he is seeking re-litigate an issue that has already been determined by the Tribunal.[54]In Ground 2, Mr Lambert argues that all FLUK’s VAT returns were submitted in the belief that they did not contain inaccuracies. As Mr Lambert was FLUK’s sole director, it is his belief that is in point.[55]On the question of whether Mr Lambert knew that the VAT returns were inaccurate because they purported to reclaim input tax that was not properly due, the Tribunal decided that Mr Lambert knew of the connection to VAT fraud, in that he knew that the contact lens business had been transferred to CLL with the intention of evading VAT. In accordance with the decision of the Upper Tribunal in Booth at [43], it follows that Mr Lambert had the requisite “state of knowledge” to support a finding of deliberate inaccuracy. As regards the under-declared output tax, the Tribunal’s finding in Fulfillment Logistics that Mr Lambert knew FLUK should have been charging VAT means he must also have known that the related VAT returns were inaccurate.[56]The Tribunal’s findings in Fulfillment Logistics therefore lead inevitably to the conclusion that FLUK, through its sole director Mr Lambert, knew that the VAT returns contained inaccuracies. In case my reasoning on this point is wrong I find, in any event, that the Tribunal’s findings in Fulfillment Logistics mean that Mr Lambert’s case has no reasonable prospect of succeeding on Ground 2.[57]In Ground 3, Mr Lambert states that he is being unfairly held accountable for actions that he has been wrongly accused of. He does not specify the actions in question but I conclude this is a reference to Grounds 1 and 2, and repeats his claim that he did not know about the fraud or the inaccuracies. My findings on Grounds 1 and 2 therefore apply equally to Ground 3.[58]In his response to HMRC’s strike-out application, Mr Lambert highlights the fact that Fulfillment Logistics was an appeal by FLUK, whereas now he seeks to appeal in his personal capacity. He refers to Article 6 of the European Convention on Human Rights (“Article 6”), which provides that “everyone is entitled to a fair and public hearing”. He states that he has not, as an individual, yet received that fair and public hearing.[59]This scenario was considered by this Tribunal in both Hackett and Trees, and in both cases the Tribunal referred to the judgment of the High Court in Gleeson. The correct approach, set out in Gleeson, is to determine whether there is a “sufficient degree of identification” between Mr Lambert and FLUK to make it just to hold that the decision to which FLUK was a party (Fulfillment Logistics) should be binding in proceedings to which Mr Lambert is a party.[60]It is clear from the reasoning of the Tribunal in both Hackett and Trees (with both of which I agree) that the answer is yes. As was the case in Trees, Mr Lambert is FLUK’s sole director, and so FLUK is his alter ego, or “corporate embodiment”. To adopt the language of the Tribunal in Hackett, Mr Lambert has, in his capacity as director of FLUK, had the opportunity to put forward his case that there was no connection between the transactions of FLUK and the fraudulent evasion of VAT, and that FLUK (through its sole director Mr Lambert) did not know of any such connection. As was the case in Hackett, to allow Mr Lambert to re-litigate this question would be an abuse of process.[61]Regarding Article 6, Mr Lambert was the sole witness for FLUK at the hearing in Fulfillment Logistics. The Tribunal’s findings, including those I have set out above concerning Mr Lambert’s knowledge of the relevant fraud, were made following a four-day hearing at which the Tribunal made detailed findings of fact based on careful consideration of the evidence before it, including the evidence of Mr Lambert. I therefore do not consider that Mr Lambert has been denied the rights contained in Article 6, notwithstanding that the previous proceedings were in the name of a different party.[62]I would also observe that Mr Lambert was provided with the opportunity to attend a further Tribunal hearing to consider this strike-out application. If he had attended he would have able to set out his case as to why the appeal should not be struck out.[63]For the reasons I have given above, I find that Grounds 1 to 3 seek to re-litigate matters that have already been determined by this Tribunal, and are therefore an abuse of process. I further find that, in light of the Tribunal’s findings in Fulfillment Logistics, Grounds 1 to 3 have no reasonable prospect of success. I therefore exercise my discretion to strike out Grounds 1 to 3.[64]Ground 4 concerns the mental distress caused to Mr Lambert as a result of the “relentless persecution” he has faced “under the guise of these false accusations”. In his response to HMRC’s strike-out application, Mr Lambert argues that his mental health must be taken into account in accordance with the Equality Act 2010.[65]For this ground of appeal to have a reasonable prospect of success, it must be a ground on which the Tribunal could cancel or reduce the penalty. Mr Lambert has not explained what provisions in the Equality Act 2010 would provide the Tribunal with a basis for cancelling or reducing a penalty for inaccuracies in a VAT return. Without this explanation I am unable to find that this ground of appeal has a reasonable prospect of success.[66]HMRC may reduce a penalty if it considers it would be right to do so because of special circumstances. In the case of FLUK, HMRC’s penalty explanation letter states that they considered whether there were any special circumstances, and concluded there were none. A Tribunal may only overturn HMRC’s decision as to whether there are special circumstances if it considers this decision was flawed.[67]Mental health considerations may provide the basis for an argument that there are special circumstances. In this case, the evidence Mr Lambert has provided of his mental health difficulties consist of a letter from his GP dated 11 December 2023, stating that Mr Lambert was diagnosed with moderately severe depression on 23 October 2023. I infer from Ground 4 that Mr Lambert is arguing that this depression has been caused by HMRC’s efforts to recover the VAT that was due from FLUK.[68]The VAT returns in respect of which HMRC has imposed penalties in this case date from 2018 and earlier. I have seen no evidence that Mr Lambert was suffering from mental health difficulties at this time. I do not consider there to be a reasonable prospect that a Tribunal would conclude that HMRC should reduce inaccuracy penalties on the grounds that HMRC’s efforts to recover the correct amount of VAT may have resulted, several years after the relevant VAT returns were submitted, in Mr Lambert suffering from depression.[69]In Ground 5 Mr Lambert states that he is unable to pay the penalty. I can state shortly that the Tribunal would not be able to reduce or cancel the penalty on these grounds. The legislation is explicit that inability to pay is not a special circumstance that would justify a penalty reduction.[70]For the reasons I have given, I find that Grounds 1 to 5 have no reasonable prospect of success. I further find that Grounds 1 to 3 are an abuse of the Tribunal’s process. I therefore strike out the appeal.[71]I would observe that I have made this decision based on Grounds 1 to 5, as they have been presented to me in Mr Lambert’s notice of appeal. This does not mean that there are no grounds on which Mr Lambert could succeed in an appeal against the penalties. The penalty assessments were issued after the Tribunal had released its decision in Fulfillment Logistics. The Tribunal has not, therefore, made findings on all of the behaviours on which HMRC relied when quantifying the penalty assessment.[72]For instance, where an inaccuracy is disclosed, HMRC must provide a reduction to reflect the quality of that disclosure, known as “telling, giving and helping”. HMRC’s assessment of the quality of FLUK’s disclosure is explained, under the headings of “telling, giving and helping”, in their penalty explanation letter dated 28 June 2023. It may be that Mr Lambert has grounds on which to dispute HMRC’s assessment of the quality of FLUK’s disclosure, and if so these would be grounds that have not previously been considered by the Tribunal.[73]If Mr Lambert exercises his right to apply for this decision to be set aside and for the appeal to be reinstated, he may apply at the same time to amend his grounds of appeal to remove those that lack a reasonable prospect of success, and replace them with new grounds.[74]If Mr Lambert wishes to pursue this course I would, however, strike two notes of caution. The first is that although he has the right to apply to amend his grounds of appeal, it does not follow that this application will necessarily succeed (still less that Mr Lambert would automatically be successful should the reinstated appeal proceed to a full hearing). In deciding whether to allow an amendment to a party’s grounds of appeal, the Tribunal will undertake a balancing exercise taking into account the need to deal with cases fairly and justly, and the injustice to each party and to litigants in general if the application is allowed or refused. For a helpful short summary of the principles the Tribunal would take into account, I would refer Mr Lambert to this Tribunal’s decision in Ataf Iqbal Butt [2024] UKFTT 893 (TC) https://www.bailii.org/uk/cases/UKFTT/TC/2024/TC09310.html at paragraph [13], and would in particular draw his attention to the need for supporting evidence.[75]The second note of caution is that not every ground of appeal will form a basis on which the Tribunal can remove a penalty in its entirety. The “telling, giving and helping” criteria that I refer to above, for instance, could only form the basis for a reduction in the amount of the penalty, not for a complete cancellation.[76]For the reasons I have given, the appeal is struck out.

Right to apply for permission to appeal

[77]This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. Release date: 16th SEPTEMBER 2025