Parwinder Singh Gill v The Commissioners for HMRC [2026] UKFTT 1164 (TC)

[2026] UKFTT 01164 (TC)Case No TC 09983
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on 7 and 9 July 2026Date Judgment date: 13 August 2026
At Taylor House, London
Appeal reference: TC/2022/13803
VAT – Personal Liability Notice – whether director acted deliberately – yes – appeal refused
Before
TRIBUNAL JUDGE ANNE REDSTONMRS SONIA GABLE
Between
PARWINDER SINGH GILLAppellantTHE COMMISSIONERS FORRespondentHIS MAJESTY’S REVENUE AND CUSTOMSRespondentMr Nathaniel Monk of TM Sterling Ltd for AppellantMs Jenny Goldring of Counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs for RespondentsDECISION

Introduction

[1]On 26 August 2022, HM Revenue & Customs (“HMRC”) issued Mr Gill with a Personal Liability Notice (“PLN”) of £1,825,818.08 for VAT periods 01/15 to 06/19 inclusive (subsequently reduced to £1,781,474.60), on the basis that deliberate inaccuracies in VAT returns made by PS Gill Construction Ltd (“PSGCL” or “the Company”) were attributable to Mr Gill as an officer of the Company.[2]The only issue before the Tribunal was whether Mr Gill acted deliberately. For the reasons explained in the main body of this decision, we found that this was the case. We refused the appeal and upheld HMRC’s decision.

Mr Gill

[3]Mr Gill By way of preliminary, we set out the position in relation to Mr Gill’s health and his command of English.

Health conditions

[4]Health conditions On 8 July 2025, there was a hearing of Mr Gill’s application to reinstate his appeal following an automatic strike out. The Tribunal allowed the reinstatement, see Gill v HMRC [2025] UKFTT 00930 (TC).[5]As explained in that decision, Mr Gill is suffering from a number of serious medical conditions. At a subsequent case management hearing on 17 December 2025, Mr Gill’s daughter Ms Jagjeet Gill provided information to the Tribunal which was summarised in the written directions (“the Directions”) issued after that hearing as follows:
“Ms Gill confirmed that a three month stay of Mr Gill’s appeal was likely to be sufficient to allow him time to recover from the pneumonia and eye problems with which he is currently suffering; she also said that prior to contracting pneumonia, Mr Gill was managing to drive and work for at least some of the time, despite his other medical conditions. It was thus reasonable to think that he would be well enough to provide witness evidence in three months’ time, and that he would also be well enough to attend a face to face hearing of his appeal in July 2026.”
[6]The dates for this substantive hearing were agreed at that case management hearing so as not to clash with Mr Gill’s hospital appointments.[7]Mr Gill attended the hearing along with Ms Gill and his nephew Mr Santokh Soman. At the beginning of the hearing, the Tribunal directed that Mr Gill was to give evidence after very short opening statements from the parties’ representatives, so he could then decide whether he wished to remain for the rest of the hearing. In the event, he attended for both days. The Tribunal also gave Mr Gill breaks both when he was in the witness box and when he was observing the rest of the hearing, in order to accommodate his medical conditions. Ms Gill confirmed at the hearing that sufficient breaks had been given.[8]In addition to the conditions referred to above, Mr Gill was diagnosed with autism spectrum disorder (“ASD”) in October 2022. The Directions issued orally at the case management hearing and later confirmed in writing, included the following, where “TMS” is a reference to TM Sterling Ltd, Mr Gill’s representative:
“By 19 January 2026, TMS is to inform HMRC and the Tribunal whether Mr Gill intends to rely on expert medical evidence relating to his autism diagnosis. Any such evidence must answer the following questions: (1) whether Mr Gill’s autism is relevant to HMRC’s decision to issue him with a Personal Liability Notice for £1,825,818 (subsequently amended to £1,781,474.60) on the basis that he deliberately filed incorrect VAT returns for VAT periods 01/15 to 06/19 inclusive (“the relevant period”); and (2) if the answer to that question is ‘yes’, how Mr Gill was nevertheless able to run his business during the relevant period, given that its turnover was almost £30m (see HMRC’s Statement of Case at [30]).”
[9]No such evidence was filed and served. Mr Monk of TMS confirmed in his skeleton argument that Mr Gill’s case “does not depend upon the Tribunal making findings as to the medical or psychiatric effect of ASD on Mr Gill’s conduct during the relevant VAT periods”. In his opening, Mr Monk confirmed that he was “not asking the Tribunal to infer that ASD affected his ability to run the company”.[10]We have therefore not taken Mr Gill’s ASD diagnosis into account when making our findings, because it was not relied on and because no medical evidence was filed. Even had we taken it into account, it would not have changed our finding of fact that Mr Gill was a competent businessman who managed many different roles and responsibilities, see §45 below.

English language skills

[11]English language skills The Notice of Appeal form, filed by Mr Monk, said Mr Gill required a Punjabi interpreter. However, Mr Gill told the Tribunal that he had arrived in the UK when he was two years old, had gone to school here, and did not need an interpreter. Miss Gill confirmed that this was the position.

The issue before the Tribunal

[12]The issue before the Tribunal The only issue before the Tribunal was whether HMRC had met their burden of proving that Mr Gill had acted deliberately in relation to the VAT under-declaration. Mr Monk emphasised that Mr Gill was not appealing on the basis that the underlying VAT assessment was incorrect, or on the basis that the penalty charged on PSGCL was incorrect. He added that, as a result, the point at issue in Sintra v HMRC [2025] EWCA Civ 1661 was not relevant to this appeal.[13]Although Mrs Gill had been a director of PSGCL, it was common ground that it was Mr Gill who had day to day control of the company. Mr Monk did not submit that HMRC had incorrectly decided that it was only Mr Gill (and not Mrs Gill) who should be liable to the PLN.

The evidence

[14]The evidence The Tribunal was provided with a hearing bundle which included correspondence between the parties and between the parties and HMRC. We also had witness evidence from Officer Emma Evans and Mr Gill.

Officer Evans’ evidence

[15]Officer Evans’ evidence Officer Evans was the HMRC Officer who had issued the PLN. She provided a witness statement, was cross-examined by Mr Monk and re-examined by Ms Goldring. We found her to be a wholly honest and credible witness, who did her best to assist the Tribunal.

Mr Gill’s evidence

[16]Mr Gill’s evidence Mr Gill provided a witness statement, gave evidence-in-chief led by Mr Monk, was cross-examined by Ms Goldring, answered questions from the Tribunal and was re-examined by Mr Monk. We found his evidence on the key issues to lack credibility, in particular:(1) his responses to Ms Goldring’s questions about the under-declared VAT;(2) his reasons for not contacting the Company’s accountant, Mr Gary Foster;(3) his evidence about paying the workers; and(4) his evidence about the invoices provided to Mr Foster.[17]Mr Gill was also sometimes evasive under cross-examination: for instance, when Ms Goldring put to him that Mr Foster “had no reason to suppress invoices”, he initially avoided answering that question, and instead said: “why didn’t he do the [Company’s] accounts”.[18]In addition, Mr Gill was in the witness box over the lunch adjournment, and was warned by the Tribunal that he must not discuss the case with anyone, including(a) Ms Gill and his nephew Santokh and(b) Mr Monk and his colleague Mr Taylor.[19]Mr Gill returned from lunch and re-entered the witness box, and immediately said “I had my brother and my nephew Santokh helped me as well”. When asked about making payments to workers, he said (my emphasis) “my nephew would help sometimes because I’m not very good with figures; he later amended that evidence, saying his nephew had worked for him five days a week and was paid £500 a week.[20]In assessing that evidence, we took into account that there had been no reference to his brother or a nephew having assisted with his business:(1) in his witness statement;(2) in any communications between HMRC and Mr Gill;(3) in any communications between HMRC and TMS; or(4) during Mr Gill’s oral evidence before lunch, which included particularised and detailed information about how he operated the business, including that he ran it alone apart from limited help given by a “guy called Rashan” in East London and another man based at Heathrow, both of whom did the paperwork for around 30 people each.[21]When asked by the Tribunal if he had spoken to anyone about his appeal over lunch, Mr Gill denied it, and said his nephew had “suddenly come to mind this lunchtime”. Ms Goldring put to him that he wasn’t being truthful, but this too was denied. Mr Gill was also asked if the nephew in question was the same nephew who was attending the hearing, but Mr Gill denied this too, although the nephew who had helped him had the same name as the nephew in the hearing room. We agree with Ms Goldring that on the balance of probabilities, Mr Gill did discuss the case over lunch, contrary to the Tribunal’s express instructions.[22]Even were we to be incorrect in that conclusion, we nevertheless reject this late evidence about Mr Gill’s brother and his nephew as not credible. It was not referred to in his witness statement, in any previous communications, or in his oral evidence before lunch. We instead agree with Ms Goldring, who said that it was not truthful and that:
“the intended effect of the post-lunch evidence about the nephew was to water down the pre-lunch evidence which demonstrated his ability to run many aspects (including some paperwork and figures) of a large business.”
[23]We therefore disregard the evidence about Mr Gill having received help in running his business from his brother and in particular from his nephew as untruthful and lacking in credibility and it plays no part in our findings of fact.

Mr Foster

[24]Mr Foster It was not in dispute that Mr Foster had worked as the Company’s accountant since soon after its formation, and there was also no dispute that it was Mr Foster who completed the VAT returns and sent them to HMRC.[25]It was part of Mr Gill’s case that he had delivered all invoices to Mr Foster. In an email to HMRC dated 27 September 2022, TMS said:
“my client entrusted an accountant namely Gary Foster…to assist him in compiling and submitting the financial returns relating to his company. My client has raised concerns regarding the level of care employed by Mr Foster executing these duties.”
[26]The Directions issued at the case management hearing included the following:
“In earlier correspondence, Mr Gill has said he relied on his accountant, Mr Gary Foster. If Mr Gill continues to rely on what Mr Foster did, or should have done, during the relevant period, but does not provide a witness statement from Mr Foster, HMRC are likely to ask the Tribunal to make an ‘adverse inference’. That means, to decide that Mr Foster has not been called to give evidence because that evidence would not help Mr Gill.”
[27]In Efobi v Royal Mail Group Ltd [2021] UKSC 33, Lord Leggatt said this about adverse inferences:
“So far as possible, tribunals should be free to draw, or to decline to draw, inferences from the facts of the case before them using their common sense without the need to consult law books when doing so. Whether any positive significance should be attached to the fact that a person has not given evidence depends entirely on the context and particular circumstances. Relevant considerations will naturally include such matters as whether the witness was available to give evidence, what relevant evidence it is reasonable to expect that the witness would have been able to give, what other relevant evidence there was bearing on the point(s) on which the witness could potentially have given relevant evidence, and the significance of those points in the context of the case as a whole. All these matters are inter-related and how these and any other relevant considerations should be assessed cannot be encapsulated in a set of legal rules.”
[28]In her skeleton argument, Ms Goldring said:
“Mr Foster would have material evidence on this issue as he could explain what material Mr Gill provided him with to file the VAT returns, what instructions and he was given, the extent of Mr Gill’s knowledge about the basis on which the VAT returns were filed and also Mr Gill’s wider knowledge regarding level of outputs and day to day sales.”
[29]In his witness statement, Mr Gill said only that he was “not in contact with Gary” and had not spoken to him since HMRC first wrote to him about their investigation. Under cross-examination, Mr Gill said he had Mr Foster’s mobile telephone number and his address, but hadn’t made contact with him since the first HMRC letter arrived in 2022, and he had not asked Mr Foster to give witness evidence in these proceedings.[30]We agree with Ms Goldring and make an adverse inference from Mr Gill’s failure to call Mr Foster, because:(1) he was self-evidently in possession of highly relevant evidence:(2) he received the invoices from Mr Gill;(3) he submitted the VAT returns;(4) Mr Gill had his contact details and did not give a reason why he had not asked Mr Foster to give evidence.[31]In other words, we find that had Mr Foster given evidence, it would not have supported Mr Gill.

Findings of fact

[32]Findings of fact The findings of fact set out below are made on the basis of the evidence we have accepted. They also take into account the adverse inference from Mr Gill’s failure to call Mr Foster. We make a further finding of fact later in this decision, see §72.

Mr Gill’s background and setting up the Company

[33]Mr Gill’s background and setting up the Company Mr Gill left school without formal qualifications, and was engaged as a “ground worker” in the construction industry. He made connections with other workers and brought them to the construction sites where he worked. His main client, a company called Houlihan & Co (Excavations) Ltd (“Houlihan”), suggested that he set up a company and concentrate on supplying workers.[34]Mr Gill incorporated PSGSL in 2008. At all relevant times, he was its sole shareholder; both he and Mrs Gill were directors, but he controlled the company; she had no active role. The business took off “from day one”: during the first year the Company supplied between 50 and 60 workers.[35]After around a year Mr Foster knocked on Mr Gill’s door, said he was an accountant and suggested that he work for PSGSL. Mr Foster’s office in Dartford; his computer and his Sage software were subsequently all paid for by PSGSL, which also paid Mr Foster a lump sum so he could make a deposit on his house purchase. Mr Foster had no shareholding or other financial interest in PSGCL.

The Company’s operations

[36]The Company’s operations The business continued to grow. By 2012 the Company had around 350 workers, of whom 100 were temps. The great majority of the engagements continued to be for Houlihan, although the Company also provided a small number of workers for other contractors.[37]Mr Gill did everything himself, apart from the accountancy-related tasks carried out by Mr Foster, and the assistance given by a “guy called Rashan” in East London and another man based at Heathrow who each did the paperwork for around 30 people. During the relevant period, Mr Gill carried out the following tasks in relation to around 300 workers.(1) hired them and matched them to the locations and the skills needed: some workers caried out only ground work, but others operated machinery;(2) made sure they had transport, including providing cars and fuel, which was supplied using company fuel cards;(3) arranged for the purchase of around 90 cars, with a further 60 being rented, and arranged for the vehicles to be repaired when required;(4) had a separate time sheet book for every site; the completed timesheets were faxed to him from each site to support the Company’s invoices and payments;(5) invoiced Houlihan and the other contractors based on the timesheets and the hourly rate which had been agreed; the invoices were faxed. Houlihan paid the invoices by transfer to the Company’s bank account; and(6) contacted the various site managers to ensure they were happy with the workers.[38]In addition, Mr Gill checked the Company’s bank account on a day to day basis. In the later part of the relevant period Mr Gill used his smart phone to do this, and to send emails.[39]Mr Gill said he gave PSGCL’s invoices to Mr Foster every week, having driven “50 miles to his house” to drop them off. We find as a fact that Mr Gill made these journeys every week. Mr Foster completed the VAT returns and sent them to HMRC. Under cross-examination Mr Gill agreed that there was no benefit to Mr Foster in under-declaring VAT, and we find that too to be a fact.

Construction Industry Scheme

[40]Construction Industry Scheme Mr Gill confirmed from the witness box that he understood how the Construction Industry Scheme (“CIS”) worked. There was no dispute that the mechanism is as follows, where there is a contractor, a subcontractor and a worker:(1) Each month, the contractor must send HMRC a complete return of all the payments it has made within CIS (or tell HMRC that they have made no payments). The CIS return must include the details of the subcontractors; the payments made and the deductions withheld.(2) Contractors must deduct tax at 20% from payments to subcontractors who are also registered for CIS, unless that person has “gross” status. If the subcontractor is not registered, the contractor must deduct 30%.(3) When the subcontractor pays its own workers, the CIS requirements also apply, so that if the worker is registered, the subcontractor must deduct 20%; otherwise it must deduct 30%.(4) The CIS deducted reduces any PAYE and NICs payable by the subcontractor, and if there is an excess, it reduces the CIS due on the payments made to the workers.(5) The workers can similarly offset their CIS deductions against the income tax and NICs liability on their earnings.[41]The Company was “net” rather than gross, so 20% was deductible from the invoices it issued. As the services supplied were standard rated for VAT, VAT at 20% was added to the invoices. By way of example, an invoice would look like this: Labour supplied £1,000 VAT @ 20% 200 Less: CIS deduction (200) Payable to the Company £1,000[42]It was not in dispute that, in the relevant period, the Company issued invoices to Houlihan totalling £29,518,230 (excluding materials); the CIS deducted was shown on the face of those invoices and totalled £5,903,646 (20% of the value of the supplies, again excluding materials). As in the above example, the VAT (20% of the supplies) and the CIS payments (20% of the value of the invoices issued by the Company) should have been the same.[43]The evidence about how the Company paid its workers was inconsistent. Mr Gill initially said that some were paid in cash, some by cheque and five or six were paid by bank transfer. Later in the cross-examination, he said the workers were paid by cheque, that the cheques were sent to Mr Foster, who worked out the CIS deductions and returned the cheques to Mr Gill, who paid the workers. Ms Goldring challenged Mr Gill on that evidence, suggesting it was not credible that Mr Gill had transferred all the cheques part-completed to Mr Foster, who lived some 50 miles away, and then received them back to be issued to the workers. We agree, and we find as a fact that Mr Gill paid the workers in cash or by cheque and that none of the latter were sent to Mr Foster.[44]Mr Monk invited us to find that Mr Gill’s administrative capability was “limited”, while Ms Goldring submitted that:
“Mr Gill was a competent and successful businessman. He was the sole shareholder and a director from 2008, over 10 years. He managed many different roles and responsibilities, dealt with a large number of workers and a lot of paperwork.”
[45]We agree with Ms Goldring and find as a fact that Mr Gill was a competent and successful businessman who managed many different roles and responsibilities.

Statutory accounts and corporation tax

[46]Statutory accounts and corporation tax The Company did not file corporation tax returns during the relevant period. The statutory accounts filed with Companies House show a figure for net assets of £1,734 between 2013 to 2015 and identical figures for cash, creditors, debtors and profit in each of those years. In 2016 the net assets reduced to £743 because an amount of depreciation had been charged, but all other entries were identical to those in the previous years, and the net assets and remained at the same level in 2017 and 2018. The accounts were signed by Mr Gill. They plainly did not reflect the profits or assets of the Company’s business.

The liquidation and Mr Gill’s health

[47]The liquidation and Mr Gill’s health On 10 June 2019, the Company entered voluntary liquidation. The liquidator obtained the Company’s invoices and other records from Mr Foster’s office. Mr Gill’s evidence was that “in the period following the failure of the company” he experienced severe physical ill-health and also became depressed.

The HMRC enquiry

[48]The HMRC enquiry On 8 July 2020, Officer Katie Grimes was working on a wider enquiry which included reviewing Houlihan’s records. In the period 01/18 to 05/19, Houlihan had recorded invoices from PSGCL totalling £7,941,750. For the same period, PSGCL’s VAT returns had declared sales of £4,015,810, a difference of £3,925,940. Officer Grimes identified that the Company had already entered liquidation, and contacted the liquidator.[49]On 21 August 2020, Officer Grimes sent an “opening letter” to the Company, saying that HMRC wanted to check its VAT returns, PAYE and NIC returns and CIS returns; she attached a Notice under FA 2008, Sch 36 (“Sch 36 Notice”) requiring the underlying records for the VAT returns; the purchase, sale and cash ledgers; the payroll records and records of payments to workers. The Sch 36 Notice also required answers to the following questions:(1) How the sub-contractors for PSGCL were engaged.(2) Whether there were there any self-billing arrangements with sub-contractors.(3) The name of the person(s) who prepared and submitted PSGCL’s CIS returns.[50]On 16 September 2020, Officer Grimes and another HMRC officer visited the liquidator’s office and reviewed the invoices which were held there. Officer Grimes compared the invoices held by Houlihan with those in the boxes in the liquidator’s office. Between 01/18 and 05/19, Houlihan held 962 invoices issued by the Company, but there were only 445 invoices in the boxes held by the liquidator.[51]Officer Grimes then compared the Houlihan invoices held by the liquidator with the supplies declared on the Company’s VAT returns, and found that they were almost an exact match. She concluded that only some of the invoices issued to Houlihan had been used to prepare the VAT returns.[52]When giving evidence, Ms Evans accepted that the amounts on the VAT returns were slightly higher than the value of the Houlihan invoices held by the liquidator. However, the Company was providing workers for a small number of other contractors, and thus issuing some other invoices apart from those relating to Houlihan. We make the reasonable inference that some or all of these other invoices were also taken into account when completing the VAT returns, and this caused the slight increase in the figures.

The assessments and the appeal

[53]The assessments and the appeal The case was then passed to Officer Evans, who carried out further checks covering the whole of the relevant period. She then raised an assessment for underdeclared VAT of £3,477,749.[54]On 20 July 2022, Officer Evans issued the Company with a penalty of £1,825,818.09, and on 26 August 2022 she issued Mr Gill with a PLN of the same value. The penalty and the PLN were subsequently reduced to £1,781,474.60 because the Company did not file a VAT return for one of the 53 VAT periods, so a penalty under Sch 24 was not appropriate.[55]There was no dispute that(a) VAT of £3,477,749.00 had been underdeclared during the relevant period, and(b) the under-declarations happened consistently over the relevant period and averaged £65k per month.

Deliberate behaviour

[56]Deliberate behaviour Mr Gill’s case was that he did not act deliberately. We next set out the law, followed by certain of Mr Gill’s evidence, the parties’ submissions, our finding of fact about Mr Gill’s knowledge of the under-declaration, and our conclusions. The legislation and case law are cited so far as relevant to this appeal.

The legislation

[57]The legislation FA 2008, Sch 24 (“Sch 24”), para 1 includes the following provisions: “(1) A penalty is payable by a person (P) where— (2) Condition 1 is that the document contains an inaccuracy which amounts to, or leads to— (3) Condition 2 is that the inaccuracy was…deliberate on P’s part.”(a) P gives HMRC a document of a kind listed in the Table below, and(b) Conditions 1 and 2 are satisfied.

(a) an understatement of liability to tax…

[58]The “table below” includes a VAT return.[59]Para 3(1) reads:
“For the purposes of a penalty under paragraph 1, inaccuracy ina document given by P to HMRC is— (a) … (b) “deliberate but not concealed” if the inaccuracy is deliberate on P's part but P does not make arrangements to conceal it…”
[60]Para 19(1) reads:
“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 HMRCmay specify by written notice to the officer.”

The case law

[61]In HMRC v Tooth [2021] UKSC, the Supreme Court held at [47] that:
“…for there to be a deliberate inaccuracy in a document within the meaning of section 118(7), there will have to be demonstrated an intention to mislead the Revenue on the part of the taxpayer as to the truth of the relevant statement or perhaps, (although it need not be decided on this appeal) recklessness as to whether it would do so.”
[62]That passage concerns TMA s 118(7), but the Supreme Court held at [45] that Sch 24 contains the “same concept of deliberate inaccuracy”.

Mr Gill’s evidence

[63]Mr Gill’s evidence Under cross-examination, Mr Gill gave the following responses:(1) In answer to the questions about why the VAT returns did not reflect all the invoices issued by the Company, he said “I can’t remember”.(2) When asked whether on receiving the opening letter from HMRC he had said to Mr Foster “I gave you everything, why didn’t you declare them”, Mr Gill said he hadn’t asked Mr Foster that question. When Ms Goldring followed up by asking “why not”, Mr Gill said “I don’t know”. Ms Goldring returned to the same question, asking “why didn’t Mr Foster file what you gave him”, to which Mr Gill said “I can’t answer that”.(3) When asked “what attempts [he] made to find out from Mr Foster what went wrong”, Mr Gill said “nothing really”.(4) In response to a question about how Mr Foster responded when told about HMRC’s letter, Mr Gill said that Mr Foster swore; when asked to clarify as to why he had sworn, Mr Gill said “I can’t remember now it’s been too long”.

The parties’ submissions

[64]It was common ground that HMRC bore the burden of proving that Mr Gill acted deliberately.[65]HMRC’s position was that:(1) There was no dispute that VAT had been underdeclared and underpaid.(2) Mr Gill was the controlling mind of the Company.(3) He prepared and issued all the invoices, but only some were used to prepare the VAT return.(4) The under-declarations were sustained and regular, month after month, for over four years; this was not an occasional or one-off error but “a continuing pattern of conduct”.(5) The under-declarations were substantial, around £65k per month.(6) Mr Gill was a competent businessman managing many different roles and responsibilities, and it was not credible that he was “unaware that £18m of sales were not reflected in VAT returns over a period exceeding four years”.(7) Mr Gill’s responses under cross-examination (set out above) are only consistent with Mr Gill knowing that the VAT returns were being filed on an incorrect basis. Had Mr Gill handed over all the invoices, and been unaware of the under-declarations, he would have asked Mr Foster why there was such a difference between the invoices he had handed over, and the figures on the VAT returns. He did not confront Mr Foster about the under-declarations or ask him to explain what had been happening, because he already knew the answer.(8) Mr Foster, who prepared the VAT returns, had not been asked to give evidence in this appeal because his evidence would not have assisted Mr Gill.(9) Mr Gill had agreed that Mr Foster would have received no benefit from falsifying the VAT returns.(10) The only explanation, on these facts, was that Mr Gill intended to mislead the HMRC by submitting falsified VAT returns, and so had acted deliberately.[66]Mr Gill’s case was that HMRC had not met their burden of proof for the following reasons:(1) There was no independent third party evidence that Mr Gill had not supplied all the invoices to Mr Foster.(2) The other invoices might have been lost either by Mr Gill or by Mr Foster.(3) Mr Gill had hired Mr Foster to do the Company’s VAT returns, and this shows he was seeking to comply with his statutory obligations.(4) Mr Gill’s health issues impaired his ability to engage.

Our finding of fact about knowledge of the under-declaration

[67]Only two people were involved with the invoices, Mr Gill and Mr Foster. One or both suppressed invoices so as to reduce the VAT on the VAT returns. There was no reason for Mr Foster to do this unless he was acting under Mr Gill’s instructions: he had no financial interest in the business, and as can be seen from Mr Gill’s responses under cross-examination, he could not explain why Mr Foster would have decided for himself to file incorrect VAT returns and not tell Mr Gill what he was doing.[68]Mr Gill also received the bank statements and checked them regularly. He therefore saw the amounts received from Houlihan as payment of the invoices, and he also saw the sums paid over to HMRC in VAT. It is not credible that Mr Gill was unaware for four years that the VAT leaving his bank account was £65k per month less than it should have been, taking into account the amounts invoiced to Houlihan.[69]We reject Mr Monk’s suggestion that the shortfalls could be explained by some invoices having been lost by Mr Gill and/or Mr Foster, for the following reasons:(1) there was no evidence that either individual was disorganised or that paperwork had gone missing for some other reason; and(2) losing some invoices might have been a credible explanation had the VAT returns been occasionally incorrect, but here the VAT was systematically suppressed for more than four years.[70]Mr Monk also referred to health issues, but Mr Gill’s own evidence was that these began “in the period following the failure of the company” and so do not provide an explanation for the errors in the VAT returns.[71]We also do not accept Mr Monk’s submission that appointing Mr Foster as his accountant demonstrates that Mr Gill intended to comply with his statutory obligations. Instead, it shows only that Mr Gill recognised that he needed help in filing the VAT returns; it says nothing about his intention to ensure that the correct figures were reported and the correct VAT paid.[72]On the basis of our analysis above, we find as a fact that Mr Gill was fully aware, throughout the relevant period, that the VAT on the returns was understated by around £65k per month, and that he therefore intended to mislead HMRC as to the VAT which was due from the Company.

Conclusion on deliberate behaviour

[73]Conclusion on deliberate behaviour We therefore find that Mr Gill acted deliberately.

Penalty calculation

[74]Penalty calculation There was no dispute that the disclosure was “prompted” within the meaning of Sch 24, para 9(2). The minimum penalty percentage for a deliberate inaccuracy is 35% and the maximum 70%, as set out in Sch 24, para 10.[75]Ms Goldring told us that HMRC’s policy is to narrow the range by ten percentage points where, as here, the disclosure has been delayed by more than ten years, in reliance on Sch 24, para 9(3) which provides that reductions for disclosure take into account “timing” as well as “nature and extent”. We were not provided with any documentation (such as pages from the HMRC Manuals) which set out that policy, but it was not put in issue by Mr Monk. We therefore accept that Officer Evans followed that policy when she calculated the penalty on the basis that the range was between 45% and 70%. She then mitigated the penalty as follows:(1) No reduction for “telling” because there was no admission that there was an inaccuracy.(2) A reduction of 40% for “helping” because of the assistance provided by the liquidator.(3) A reduction of 30% for “giving” again because of the assistance provided by the liquidator.[76]Mr Monk did not submit that the mitigation given should be amended, and we agree. We also find that the penalty is attributable to Mr Gill under Sch 24, para 19 because the inaccuracy was attributable to him.

Overall conclusion and right to apply for permission to appeal

[77]Overall conclusion and right to apply for permission to appeal We find that Mr Gill acted deliberately, and uphold the PLN of £1,781,474.60.[78]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: 13 August 2026