Commissioners for HMRC v ZS Tech Solutions UK Limited [2025] UKFTT 525 (TC)

[2025] UKFTT 00525 (TC)Case No TC09515
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 30 April 2025Date Judgment date: 6 May 2025
In public by remote video hearing
Appeal reference: TC/2024/02695
INCOME TAX – SEIS and EIS relief – failure to provide information – application under s100C TMA for imposition of a £300 penalty under s98 TMA - non-attendance by taxpayer – application allowed
Before
TRIBUNAL JUDGE NIGEL POPPLEWELL
Between
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSAppellantZS TECH SOLUTIONS UK LIMITEDRespondentMr Jazz Blount litigator of HM Revenue and Customs’ Solicitor’s Office for AppellantsThe Respondent did not attend and was not represented for RespondentDECISION

INTRODUCTION

[1]On 25 April 2024 the appellant (or “HMRC”) made an application for proceedings to the tribunal under section 100C Taxes Management Act 1970 (“TMA”) asking the tribunal to determine that a penalty of £300 should be visited on the respondent (or “the company”) under section 98(1)(b)(i) TMA (“the application”).[2]For the reasons given later in this decision, I allow the application

THE LAW

[3]Under section 241 of the Income Tax Act 2007 (“ITA”), where a company has issued shares which have benefited from EIS relief, and an event occurs which means that one or more requirements for that relief is not met, the issuing company is obliged to provide HMRC with details of that event within 60 days of its occurrence.[4]Under section 242 ITA, where HMRC believe that a person has not given notice under section 241 ITA, HMRC may by notice require that person to provide them with such information relating to the event as is reasonably required by HMRC.[5]Under section 98(1)(b)(i) TMA, where a person fails to furnish information under section 241 ITA, that person is liable to a penalty not exceeding £300.[6]Under Rule 8(1) of the First-tier Tribunal (Tax Chamber) Rules 2009 (as amended) (“theRules”):
“The proceedings…will automatically be struck out if the appellant has failed to comply with a direction that stated that failure by a party to comply with the direction would lead to the striking out of the proceedings…”
[7]Under Rule 8 (7):
“This rule applies to the respondent as it applies to an appellant except that- (a) a reference to the striking out of the proceedings must be read as a reference to the barring of the respondent from taking further part in the proceedings…”
[8]Under Rule 8 (8):
“If a respondent has been barred from taking further part in proceedings under this rule and that bar has not been lifted, the Tribunal need not consider any response or other submissions made by that respondent and may summarily determine any or all issues against that respondent.”
[9]Under Rule 33:
“If a party fails to attend a hearing the Tribunal may proceed with the hearing if the Tribunal- (a) is satisfied that the party has been notified of the hearing or that reasonable steps have been taken to notify the party of the hearing; and (b) considers that it is in the interests of justice to proceed with the hearing.”

THE FACTS

[10]I was provided with a bundle of documents from which I find the following facts: (1). The company had, as at 23 May 2022, raised a total of £150,000 under the SEIS, and £8,616,540 under the EIS. (2). On 31 August 2022, HMRC issued an email to the company’s agent and also to the sole director of the company, advising that the last approved compliance statement for shares issued on 3 April 2022 showed that total amount of relevant investments made in the company in the relevant year exceeded the statutory maximum. (3). On 23 February 2023, HMRC issued a statutory information notice to the company under section 242 ITA 2007 seeking various documents. (4). On 7 August 2023, HMRC issued a final reminder to the company that the aforesaid information had not been forthcoming from the company. (5). No response was received from the company and so HMRC issued the application. (6). The tribunal released directions in relation to the application on 3 May 2024 (“theDirections”). (7). On 10 September 2024, the tribunal (Judge Bailey) issued an unless order (“theUnless Order”). This recorded that the company had failed to comply with the Directions and had also failed to reply to a letter from the tribunal dated 1 August 2024. The Unless Order directed that unless the company no later than 5 pm on 24 September 2024 confirmed that it intended to proceed with their defence to the appeal, and complied with Directions 1, 2, 3 and 4 of the Directions, they “…WILL be BARRED from taking any further part in the proceedings”. (emphasis in the original). (8). In a letter dated 21 October 2024 sent by post to the company, the tribunal recorded that the company had not complied with the Unless Order and had been barred from further participation in the appeal. The letter told the company that the effect of being barred is that “the Tribunal need not consider any response or other submissions made by you and may summarily determine some or all of the issues in this appeal in the appellant’s favour”. (9). In a letter dated 18 March 2025, the tribunal notified the company that the hearing was due to take place on 30 April 2025 starting at 10 am. That letter told the company that the application had been listed as a video hearing and so there was no need for the company to attend a court or tribunal centre. It also provided much helpful advice regarding what the company should do before the hearing and what happens at a hearing. The tribunal has no record of the company responding to that letter.

COMPANY NON-ATTENDANCE

[11]The hearing was scheduled to start at 10am. At that time no person representing the company was in attendance. I paused the hearing and asked a member of the tribunal staff to contact the company. That member of staff attempted to do so but the company has provided no contact telephone number, nor has the company appointed an authorised representative for the purposes of the application.

DISCUSSION

[12]It was my view that the appellant had been notified of the hearing and certainly reasonable steps have been taken by the tribunal to notify it of the hearing. It was also in the interests of justice to hear the application in the company’s absence. The company has not engaged in these proceedings, and it would not be fair and just for a consideration of the application to be postponed simply because the company has not deigned to attend. In any event, the documents speak for themselves and there is little, in the absence of any formal application for reinstatement, that the company could tell me which would influence my consideration of the application. Finally, as set out above, once a respondent has been barred from taking part in proceedings, then I need not consider any response or other submissions made by the respondent and can summarily determine the issues against that respondent, subject, of course, to the overriding objective of dealing with cases fairly and justly.[13]I therefore proceeded with the hearing and considered HMRC’s submissions on the application.[14]The company was automatically barred from further participation in these proceedings at 5.01 pm on 24 September 2024 as it had failed to comply with the Unless Order.[15]In these circumstances, as mentioned above, I can summarily determine the issue against the company. I have no hesitation in doing so and in allowing the application. It is clear to me that the company has failed to comply with the request for information and the application has been properly made out. The company is liable to a penalty of £300 for failure to comply with the provisions of section 242 ITA.

DECISION

[16]I allow the application.

RIGHT TO APPLY FOR PERMISSION TO APPEAL

[17]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: 06th MAY 2025