Aqsa Khan v The Commissioners for HMRC [2026] UKFTT 1205 (TC)

[2026] UKFTT 01205 (TC)

Case No TC 09988

FIRST-TIER TRIBUNAL

TAX CHAMBER

Venue Sitting at George House, Edinburgh

Hearing Heard on: 13 and 14 November 2025

Date Judgment date: 18 August 2026

Appeal reference: TC/2022/12888

VALUE ADDED TAX – suspected missing trader fraud – penalty issued to company under Schedule 24 to Finance Act 2007 – personal liability notice issued to sole director – whether VAT returns filed by company for relevant periods contained inaccuracy – yes – whether inaccuracy in returns deliberate – yes – whether attributable to director – yes – whether company’s details hijacked by another person – no

Before

TRIBUNAL JUDGE BAILEY

MR IAN SHEARER

Between

AQSA KHANAppellant

THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondent

The Appellant represented herself, assisted by her husband, Mr Sayeed Beg

Neale Tosh of counsel, instructed by the Office of the Advocate General for Respondents

DECISION

Introduction

[1]The appeal before us is an appeal against a Personal Liability Noice (“PLN”), making the Appellant personally liable to pay 100% of a penalty that had been issued to Best Buy Scot Limited (“Best Buy”), a company of which she was sole director.

[2]The penalty is in the amount of £1,492,869, being 70% of the amount of VAT that HMRC consider Best Buy failed to declare in the VAT returns filed for the VAT periods 11/20, 02/21 and the final period to 27 April 2021.

An overview of the parties’ submissions

[3]An overview of the parties’ submissions The parties’ arguments are set out in more detail below but, in brief, HMRC’s case was that there were amounts in respect of metal trading that were omitted from Best Buy’s VAT returns for the final three VAT returns filed, that these omissions were too large to have been overlooked and so the omissions must have been deliberate, and that the omissions were attributable to the Appellant because she was Best Buy’s sole director and shareholder.

[4]The Appellant’s case, in summary, was that her identity details had been stolen, enabling someone else to hijack Best Buy, and that she had no knowledge of, or responsibility for, the trading that Best Buy was said to have engaged in and which was not included in the final three VAT returns. The Appellant told us that she had never bought, sold or traded in metals.

Outcome

[5]Outcome We have taken time in our deliberations to ensure an appropriately careful review of all of the evidence before us and to reflect upon both parties' submissions. We recognise that our conclusion is one that has extremely serious consequences for the Appellant and her young family, and it is not a conclusion we have reached lightly. However, for the reasons set out below, this appeal is dismissed.

[6]We appreciate that this outcome will be very disappointing to the Appellant who stated, at the conclusion of the hearing before us, that she would continue to appeal if she was unsuccessful before us. The final paragraph of this decision explains what the Appellant should do, and the relevant time limits, if she wishes to seek permission to make an onward appeal.

Evidence

[7]Evidence The panel had the benefit of a bundle of documents compiled for the hearing. Subsequent to the hearing, the panel was provided with a document which showed the Insolvency Service’s decision to ban the Appellant from acting as a director for a period of seven years from 28 November 2025 for her failure to maintain, preserve or deliver up adequate accounting records for Best Buy. We admitted this additional document into evidence.

[8]The bundle of documents included witness statements from five witnesses. The panel heard oral evidence from four of these witnesses: the Appellant and her husband, Mr Sayeed Beg (“Mr Beg”), gave evidence in support of the appeal; Mr Pearson and Ms Lucas gave evidence in support of HMRC.

[9]Although a Mr AH, an accountant, had made a witness statement in support of the Appellant, the Appellant told us that she had lost touch with AH and so he would not be attending the hearing. As the Appellant did not make AH available to give oral evidence or undergo cross-examination, unless there is supporting documentary evidence, we give only limited weight to AH’s witness statement on the aspects where this statement is relied upon to support the Appellant’s case.

[10]For all of the witnesses but particularly for the Appellant and Mr Beg, who were required to look further back in time, considerable time has passed since the events in question. In our approach to all of the oral evidence, we kept in mind the comments in Gestmin v Credit Suisse

[2013] EWHC 3560 (Comm)

about the fallibility of memory, the mind’s ability to revise past memories to accord with current beliefs, and the desirability of tribunals and courts placing greater reliance on contemporaneous documents than contradictory assertions that are made only once the significance of issues is known.

[11]While we have tried to take account of the passing of time, much of the oral evidence given by Mr Beg was to the effect that he did not clearly recall certain points, was unsure of facts or dates, or that he had not known certain matters until attending the hearing. Mr Beg did not always directly answer the questions asked of him and on some issues (for example, the number of the unit that had been leased, and who had leased it) Mr Beg gave evidence that conflicted with the contemporaneous documentary evidence. Where such a conflict occurred then, in the absence of a credible explanation for that conflict, we preferred the documentary evidence. We did not, on the whole, consider Mr Beg to be a particularly reliable witness.

[12]Again, for the Appellant, considerable time has passed since both the events in question, and also since the Appellant made her witness statement. However, even allowing for that, the Appellant was frequently not able to give the panel an answer or able to explain events other than to say that it would have been the actions of, or on the advice of, one of her professional advisors. Where there was a conflict between the Appellant’s evidence and contemporaneous documentary evidence, we preferred the documentary evidence. We did not consider the Appellant to be a reliable or particularly credible witness, and we have set out below specific aspects of her evidence that we do not accept. We add for the record that while the Appellant was giving her oral evidence, we took judicial notice of certain dates relating to events during the first Covid-19 lockdown, and provided these dates to the Appellant in order that she had an opportunity to respond.

[13]We found both Mr Pearson and Ms Lucas to be honest and credible witnesses. We were satisfied that both of these witnesses were doing their best to assist the panel. We accept all of Mr Pearson’s evidence. However, when she was giving her evidence Ms Lucas additionally told the panel about her knowledge of other matters relating to Mr Beg, which were not directly related to the actions of Best Buy. These other matters were not pleaded as being part of HMRC’s case, were not mentioned in Ms Lucas’s witness statement (which was silent on Mr Beg), and they had not been put to Mr Beg when he had earlier given his oral evidence. We disregard all of Ms Lucas’s evidence on these matters. We accept the remainder of Ms Lucas’s evidence.

Facts found

[14]Facts found On the basis of the evidence before the panel, we found as follows:

Background

[15]Background For a number of years, Mr Beg and his family had traded in men’s, women’s and children’s clothing. This business, in Glasgow, had begun with Mr Beg’s grandfather, and continued with Mr Beg’s father and then Mr Beg.

[16]Mr Beg and the Appellant met at university where Mr Beg had studied accounting and finance, and the Appellant had studied finance, investment and risk. Mr Beg and the Appellant married in 2013.

[17]From about 2015, the Appellant had been involved in the sale of homeware from a retail unit at Market Village in the Forge shopping centre in Glasgow. A company called Laibah Glazing Solutions Limited (“Laibah”) had been incorporated in 2015 as the vehicle for this business, and the Appellant had been a director of this company for a period of time. The Appellant described this as a family business but told the panel that she had become a director of Laibah as she thought she would know what she was doing and she wanted to have some control.

[18]The business of selling homeware was not successful, and the Appellant and Mr Beg reverted to selling clothing. The Appellant could not tell the panel how long Laibah had traded because it was too long ago to recall but she thought it was about two, or two and a half, years.

[19]The Appellant could not recall the dates when the change from homeware to clothing occurred but she told the panel that Mr Beg’s subsequent trade in clothing was at the same retail unit in Market Village where homewares had previously been sold. Mr Beg said, and we accept, that he traded from this same unit as a sole trader, selling clothing, for about six to eight months prior to the incorporation of Best Buy. We find on the balance of probabilities that Mr Beg’s sole trade in clothing from a retail unit in Market Village was from August 2017 or earlier.

[20]In the bundle are 30 Market Village rental invoices. The earliest of these 30 invoices is for the week beginning 11 September 2017, and it is addressed to Mr Beg, trading as SSS Direct. This invoice is in respect of the rental of Units 22, 23 and 24 at Market Village. This invoice is consistent with Mr Beg’s evidence that he was a sole trader at Market Village prior to the incorporation of Best Buy.

[21]We find that Mr Beg’s sole trade in clothing was from Units 22, 23 and 24 of Market Village. Mr Beg told the panel, and we accept, that Units 22, 23 and 24 of Market Village were essentially combined as one, larger retail unit. (The Market Village rental invoices are discussed further below.)

The Appellant’s employment

[22]The Appellant’s employment In her witness statement, the Appellant said: For both Laibah and Best Buy I was assisted by my husband and other members of the family as required. I was also employed through this period with the British Medical Association and then the NHS, where I currently work.

[23]In her oral evidence the Appellant said, and we accept, that she had worked for the British Medical Association from about 2016, giving advice on employment issues. This engagement had been full time.

[24]The Appellant said, and we accept, that after maternity leave, she had begun work in March 2018 with a medical practice. This engagement was also full time initially but the Appellant said, and we accept, that after about three months, she reduced her hours and worked condensed hours in order to spend more time with her children and to work in the business. In the bundle are payslips from September 2018 showing the Appellant’s employment. On the basis of the hourly rate and the annual salary shown, we find that this employment was the equivalent of about four days each week.

[25]The payslips in the bundle show that the Appellant remained employed on this basis until October 2019 when she went on maternity leave. The Appellant returned to part time employment with a medical practice in or about October 2020 but (based upon her hourly rate) we find that she further reduced her hours to the equivalent of about two days each week. The payslips in the bundle show that this employment continued until March 2022.

The incorporation of Best Buy

[26]The incorporation of Best Buy Best Buy was incorporated on 7 February 2018. Despite then being employed full time, the Appellant was the sole director and shareholder of Best Buy. The Appellant said that Best Buy had been incorporated on the advice of AH but that she could not remember what that advice was because it had been given so long ago.

[27]The Appellant told the panel that she could not recall why Best Buy had been incorporated but she did not recall it happening as the result of any significant event. The Appellant said that Best Buy’s incorporation “would not have been done without consulting with me” but she could not remember anything more about when, or why, the decision was taken.

[28]The Appellant said that she had not really thought of running Best Buy with Mr Beg. When she was pressed by HMRC about why Mr Beg was not a director of Best Buy, the Appellant said that, in 2018, she did not think a company could have two directors at one time, and that she wanted “the final say”.

[29]Mr Beg said that there was no particular reason why he did not become a director, and he had been told by AH that he did not need to be a director. When pressed, Mr Beg said that he did not think it mattered that he was not a director of Best Buy.

[30]The Appellant and Mr Beg both accepted that the day to day running of the clothing retail business was undertaken by Mr Beg, with Mr Beg recruiting staff, selecting stock, dealing with customers and managing complaints. We have found (above) that the Appellant was in employment (initially full time, subsequently part time) and we accept that she was also busy raising her young children.

[31]As Mr Beg had traded as a sole trader, and as neither the Appellant nor Mr Beg could give any reason for the incorporation of Best Buy, we conclude that there was no reason for Best Buy to have been incorporated, either in 2018 or at all.

[32]As no credible reason was advanced, we conclude that there no reason why it was the Appellant who became director of Best Buy, instead of either Mr Beg alone, or both the Appellant and Mr Beg together.

The address of Best Buy

[33]The address of Best Buy The address provided to Companies House when Best Buy applied for incorporation in February 2018 was “Unit 21 Market Village”.

[34]The Appellant and Mr Beg both said, and we accept, that Market Village was a small centre of independent retailers within the Forge Shopping Centre.

[35]On the basis of documents in the bundle we find, on the balance of probabilities, that “Unit 21 Market Village, Forge Shopping Centre” is a different address to “Unit 21, Forge Shopping Centre”.

Whether Best Buy traded from Unit 21 Market Village

[36]Whether Best Buy traded from Unit 21 Market Village In their witness statements both the Appellant and Mr Beg stated that Best Buy: … operated from the “In Shops” Market Village within the Forge Shopping Centre, … The unit was rented and the rent was £350 per week.

[37]The Appellant said that the unit rented by Best Buy was the same unit that Mr Beg had previously rented as a sole trader.

Whether there was a lease between Best Buy and Market Village

[38]Whether there was a lease between Best Buy and Market Village During cross-examination, Mr Beg was asked whether there was a written lease for the rented retail unit. Mr Beg told the panel that he could not remember where he had put his copy of the lease, and that he could not ask the landlord for a copy as that landlord had gone into liquidation. The Appellant said that she had never seen a lease between Market Village and Best Buy but that she imagined there would have been a lease as the premises were already rented by Mr Beg.

[39]As the Appellant was Best Buy’s sole director, and the Appellant had never seen a lease, we find that the Appellant could not have signed, and did not sign, a lease with Market Village. Therefore, we find that was no lease between Best Buy and Market Village.

The rent of the unit at Market Village

[40]The rent of the unit at Market Village The Appellant said that she knew the rent was £350 each week because she had seen the paper invoices. The Appellant and Mr Beg had provided HMRC with the 30 Market Village rental invoices (mentioned above), putting those invoices forward as evidence that Best Buy had been trading from Market Village. None of these 30 invoices show a weekly rent of £350. While the first line on each invoice (between September 2017 and the end of November 2018) describes a “maximum licence fee” of £358.49, because of a Market Village subsidy, also specified on each invoice, we find that the weekly rent was £150 in September 2017, and that this rent had increased to £165 by May 2018. From December 2018 (after the revamp, discussed below) the maximum licence fee reduced to £229.26 but the subsidy also reduced, leading to an increase of the weekly rent to £205.

[41]It would have required a further rent increase of more than 70% over the 15 month period from September 2019 to December 2020 (the last date on which the Appellant told us Best Buy might have been trading) for the retail unit rent to have reached £350 each week. We do not consider this likely and we find that the retail unit rent was not £350 each week at any time in the period when Best Buy was said to have been trading. We find, on the balance of probabilities, that the Appellant’s lack of involvement in the trading from Market Village led to her misunderstanding the rental invoices, and so misunderstanding the amount of rent payable to Market Village each week.

The person to whom the Market Village invoices were addressed

[42]The person to whom the Market Village invoices were addressed The first Market Village invoice is noted above. The remaining 29 Market Village rental invoices in the bundle, cover (with gaps) the week beginning 7 May 2018 to the week beginning 9 September 2019. While Best Buy had been incorporated before the earliest of these remaining 29 invoices, none of these invoices are addressed to Best Buy and none of them are in respect of Unit 21 at Market Village.

[43]In respect of the person to whom the Market Village invoices are addressed, all 30 of the invoices are addressed to Mr Beg, trading as SSS Direct. HMRC suggested to Mr Beg that the name on the invoices would have changed if Best Buy had taken over from him as the person trading from the relevant unit at Market Village. In response, Mr Beg said that he could not get the name on the invoice changed because the rent paid to Market Village was in arrears. Mr Beg also suggested that the person collecting the rent was corrupt and pocketed the rent.

[44]Looking at the first reason given by Mr Beg, we can see from the Market Village invoices available in the bundle that there were no rental arrears in the earliest invoice for 2018 (for the week beginning 7 May 2018). Therefore, even if Market Village would not change the name of the person invoiced when a person in arrears surrendered their unit to another trader, that practice would not have prevented Market Village from updating the invoices in the week beginning 7 May 2018, to show that Mr Beg (who was at that date up to date with his rent) had been succeeded by Best Buy. (For completeness, there were also no rental arrears in the invoices for the weeks beginning 18 June 2018, 25 June 2018 or 2 July 2018. There were arrears of £20 in the week beginning 9 July 2018, but this small debt was paid off by the time that an invoice was issued for the week beginning 16 July 2018. There were no rental arrears for the weeks beginning 23 July 2018, 30 July 2018, 6 August 2018, 13 August 2018, 20 August 2018, 27 August 2018, 3 September 2018, 10 September 2018, 17 September 2018, 24 September 2018, 1 October 2018 and 8 October 2018. The rent was £65 in arrears for the week beginning 15 October 2018, £10 in arrears for the week beginning 19 November 2018, and there were no arrears for the weeks beginning 26 November 2018, 10 December 2018, 17 December 2018, 31 December 2018, 7 January 2019, 21 January 2019, or 4 March 2019. The rent was £490 in arrears by the week beginning 10 June 2019, and £730 in arrears by the week beginning 9 September 2019 (the final invoice available).)

[45]In addition, on this point, we have accepted (above) the Appellant’s evidence that Mr Beg had succeeded Laibah as the tenant of Units 22, 23 and 24 in the summer of 2017. As it was Mr Beg’s name, rather than Laibah’s name, that was on the rental invoices in the bundle, we conclude that Market Village was willing to change their invoices to show the correct tenant name after a new tenant rented one of their retail units, and that Market Village did so prior to September 2017. Therefore, we do not accept this first explanation given by Mr Beg.

[46]Looking at the second reason given by Mr Beg, there is no evidence (other than Mr Beg’s assertion, made for the first time before the Tribunal) to support the suggestion that the name on the invoice could not be changed because the rent collector was corrupt; we reject this explanation. Some of the Market Village invoices are signed to confirm rent had been paid by the person who had collected the rent. It is inherently unlikely that a rent collector who was stealing rent that he had collected would give a tenant (or a tenant’s successor in title) any reason to complain about other matters (such as a name update) if that tenant or successor had the means to expose such theft. We do not accept the second explanation given by Mr Beg.

[47]We conclude that no credible reason has been provided for why Best Buy’s name does not appear on any of the post February 2018 invoices.

The unit which was rented

[48]The unit which was rented In respect of the number of the retail unit from which Best Buy was said to trade, Mr Beg told the panel that there had been two revamps of the units at Market Village, and that both of these had led to a re-numbering of the Market Village retail units.

[49]Mr Beg said that in the first revamp Units 22, 23 and 24 had been re-numbered as Unit 34, and in the second revamp Unit 34 had been re-numbered as Unit 21. Mr Beg was unable to provide precise dates for these revamps, but said that the first of these revamps happened either in 2017 or “after 2018”, and the second revamp was in 2019, “just before Covid”.

[50]The Market Village rental invoices for the weeks from 11 September 2017 to 26 November 2018 inclusive are for Units 22, 23 and 24, whereas the rental invoices for the weeks from 10 December 2018 to 9 September 2019 inclusive are for Unit 34. We find on the balance of probabilities that there was one revamp of the units at Market Village, and that this occurred in or about the first week of December 2018. As a result of this revamp, Units 22, 23 and 24 were numbered as Unit 34 from about the first week of December 2018 onwards.

[51]It is not necessary for us to make any findings about whether there was a second revamp of Market Village after 9 September 2019, following which Unit 34 could have been re-numbered as Unit 21. At the time of its incorporation on 7 February 2018, Best Buy gave its address to Companies House as Unit 21, and so we consider whether Best Buy traded from a retail unit that was numbered Unit 21 in February 2018. The Appellant and Mr Beg both said that the retail unit from which Best Buy had traded was the same unit as the retail unit from which Mr Beg had traded as a sole trader. The rental invoice for the week beginning 11 September 2017 shows that Mr Beg rented Units 22, 23 and 24 at this time. There is no suggestion from either Mr Beg or the Appellant (and it would be inherently incredible in any event) that, on a date after 11 September 2017 but prior to Best Buy’s incorporation in February 2018, the number of this retail unit changed from Units 22, 23 and 24 to Unit 21, and then after Best Buy’s incorporation but prior to 7 May 2018 (the second rental invoice), the number changed back to Units 22, 23 and 24. Therefore, even if Unit 34 was revamped a second time after 9 September 2019, and even if this retail unit was re-numbered from Unit 34 to Unit 21 in that second revamp, this retail unit would not be the same retail unit that was numbered Unit 21 on 7 February 2018.

[52]As a result of this analysis, we reject the evidence of Mr Beg and the Appellant that the reason the rental invoices do not show Unit 21 being rented is because of subsequent changes to the numbering of the retail units at Market Village.

[53]We find, on the balance of probabilities, that the Market Village invoices provided correctly show that Mr Beg, trading as SSS Direct, rented a retail unit at Market Village. We find that that retail unit rented by Mr Beg was numbered 22, 23 and 24 from September 2017 to November 2018, and that, from December 2018, this retail unit was numbered 34. We find, on the balance of probabilities, that Mr Beg was trading as a sole trader from Market Village until (at least) September 2019 (the date of the last invoice in the bundle ) and that is why his name appears on the Market Village invoices.

[54]We do not accept that the Market Village rental invoices for September 2017 to September 2019 provided by the Appellant demonstrate that Best Buy traded as a clothing retailer from a unit at Market Village from February 2018 to September 2019. Having rejected the evidence of the Appellant and Mr Beg on this point, we conclude that there was no credible evidence before the panel that Best Buy traded as a clothing retailer from any retail unit at Market Village in this period.

[55]We find, on the balance of probabilities, that Best Buy did not trade as a clothing retailer from a retail unit at Market Village in the period February 2018 to September 2019.

Best Buy’s purchases

[56]Best Buy’s purchases The Appellant provided HMRC with a number of wholesalers’ receipts. In her witness statement, the Appellant says: Stock was sourced from Glasgow clothing wholesalers, such as Bonanza and Lal & Co. I now produce purchase records that related to [Best Buy].

[57]There are 41 receipts in the bundle, issued by Bonanza Wholesale Limited, Paul Jain and Lal & Co. These receipts show purchases between 29 March 2018 and 1 December 2021. We find that these receipts show the purchase of clothing from clothing wholesalers, and that the amounts are such that it is more likely than not that the purchases are of stock. However, there is nothing on any of these receipts to show who purchased the goods specified on the receipt.

[58]It cannot be the case both that Best Buy had ceased trading by August 2020 (or December 2020 at the latest) as the Appellant said (see below), and also that Best Buy purchased the stock shown on the wholesalers’ receipts issued in 2021. We cannot discount the possibility that all of these receipts relate to another person (for example, Mr Beg, who we have found was trading as a sole trader until at least September 2019) and that the receipts are unrelated to Best Buy.

[59]We do not accept the Appellant’s assertion that the wholesalers’ receipts demonstrate that Best Buy made purchases of stock between 29 March 2018 and 1 December 2021.

Best Buy’s sales

[60]Best Buy’s sales There is no documentary evidence of any retail sales by Best Buy in any period. The Appellant accepted that she was not able to provide HMRC or the Tribunal with any retail sales records for Best Buy for any period.

[61]The Appellant said that, although it could not now be found, there had been a shorthand notebook which was used by each person working that day to record Best Buy’s sales. The Appellant told us that “everyone did their own thing” and if she was working then she would enter details of each sale in this notebook but if others, such as Mr Beg’s father, had been working then they might only enter one figure as the total sales for that day. The Appellant said that this would be a running total of sales and that this figure would be equal to the cash counted at the end of that day.

[62]When asked why she allowed this inconsistent approach to Best Buy’s records to occur, the Appellant said that she did not challenge her father-in-law out of respect for her elders, and she did not challenge Mr Beg because she trusted that he knew what he was doing. (There was no evidence about what Best Buy’s other employees did and whether any of them were challenged by the Appellant.) Under cross-examination the Appellant accepted that, with hindsight, the record-keeping she described was inadequate and that sales were not documented sufficiently.

[63]In his correspondence with HMRC, on 22 June 2022, a Mr JO (the Appellant’s first advisor in this litigation) said: If a receipt was required, the customer was given a small “Receipt” ticket from a duplicate book. It did not show name/address/VAT Number, it was simply a receipt for a return, which would be recognised by the staff should the clothes be brought back.

[64]JO’s statement is similar to what the Appellant said in her witness statement: When a sale was made, if a customer asked for a receipt, they would be given a tear off receipt from a duplicate book. The receipt would be handwritten, but it would not show the address or the VAT Number of the business.

[65]At the hearing, the Appellant was not asked about receipts, and she made no reference to a duplicate book. We find, on the balance of probabilities, that the duplicate book described by JO in correspondence was JO’s understanding of the shorthand notebook that the Appellant described to the panel. We find, on the balance of probabilities, that there was (at most) one book.

[66]The Appellant said that the average retail sales by Best Buy each week were about £2,000 to £2,500 and that it was a small stall and not busy. (We have found that the clothing retail trade from Market Village was by Mr Beg, not by Best Buy.) Given that the Appellant also said that she spent only one day each week at the retail unit, and given the extremely limited record-keeping, we do not accept that the Appellant was able to give an accurate estimate of the weekly sales from Mr Beg’s retail clothing trade from Market Village.

Best Buy’s financial statements for the year ended 28 February 2019

[67]Best Buy’s financial statements for the year ended 28 February 2019 In the bundle was a copy of Best Buy’s financial statements for the year ended 28 February 2019, as filed at Companies House. The Appellant said that AH, Best Buy’s former accountant, had prepared Best Buy’s accounts for the year ended 28 February 2019 and for the year ended 29 February 2020. This is corroborated by AH’s witness statement and we find that AH prepared both of these sets of accounts for Best Buy.

[68]Best Buy’s financial statements for the year ended 28 February 2019 are dated 14 March 2019. The Appellant said that she was pregnant at this time, with a due date in October 2019, so it would have been Mr Beg who took the records to AH in early March 2019 for the accounts to be prepared. We can see from the Appellant’s payslips in the bundle that the Appellant was continuing to work as usual at this time but we accept that it was Mr Beg, as the person who was primarily involved in the retail trading from Market Village, who took such records as were available to AH. We have set out above the extremely limited nature of Best Buy’s documentary records.

[69]The Appellant said that she knew the financial statements for the year ended 28 February 2019 were being prepared but she did not know the exact figures. The Appellant said that, even at the hearing, she still did not know enough to know if the figures in Best Buy’s financial statements for the year ended 2019 were correct. We do not accept that a person who had become a director of a company in order to have “the final say” would not want to see the final accounts prepared for her in respect of that company.

[70]The Appellant accepted that she asked AH to register for VAT (and that application was made on 12 March 2019). It follows that the Appellant either saw the completed accounts for the year ended 28 February 2019, and understood them sufficiently to be able to give a considered instruction to register Best Buy for VAT, or the Appellant was so careless as to her responsibilities as a director that she gave the instruction for Best Buy to be registered for VAT without seeing, or sufficiently understanding, the completed accounts available for the year ended 28 February 2019. Given the Appellant’s desire to be in charge of Best Buy, we find, on the balance of probabilities, that the Appellant approved the accounts for the year ended 28 February 2019, and those approved accounts were filed by AH.

[71]The financial statements for the year ended 28 February 2019 showed that Best Buy had “cash in hand and at the bank” of £33,093. The Appellant said that all of Best Buy’s transactions were in cash, and (as there was no bank account at this time) any cash was brought home and subsequently was used to purchase stock or pay the unit rent. The Appellant said that she could not recall ever seeing more than £1,000 from week to week, and that she and Mr Beg did not have large amounts of cash at home. We note that this figure of £1,000 differs from the £2,000 to £2,500 figure the Appellant said was her estimate of the weekly retail sales.

[72]In cross-examination the Appellant agreed that £33,093 was a large amount. The Appellant was unable to explain why Best Buy’s financial statements showed that Best Buy held this amount of cash as at 28 February 2019.

[73]The financial statements for the year ended 28 February 2019 also showed that Best Buy had debtors of £10,200. In her evidence, the Appellant said that Best Buy would extend credit to only one or two customers and this line of credit would be no more than £100 at a time. The Appellant was unable to explain why Best Buy’s accounts for the year ended 28 February 2019, showed that Best Buy had debtors of £10,200.

[74]We find that either the Appellant’s description of Best Buy’s finances, or Best Buy’s financial statements, or both, contain significant inaccuracies.

[75]We are not satisfied that either the Appellant’s description, or Best Buy’s financial statements for the year ended 28 February 2019, accurately reflect Best Buy’s true financial position at that time.

Best Buy’s turnover and VAT registration

[76]Best Buy’s turnover and VAT registration On 12 March 2019, Best Buy applied for VAT registration. The Appellant said that AH made this application on behalf of Best Buy. We accept it was AH who filed the application because this is consistent what appears to be AH’s email address appearing on the application form, and also consistent with the witness statement made by AH. In addition, the address provided on the application form is given as “Unit 21, Forge Shopping Centre”, with “Market Village” omitted. We conclude that such an omission is more consistent with the application form having been completed (and submitted) by someone who was broadly aware of Best Buy’s address but who did not appreciate it was necessary to specify that the address was within the Market Village section of Forge Shopping Centre.

[77]The Appellant said, and we accept, that the telephone number provided on the VAT registration application form was Mr Beg’s telephone number. We find that the email address for Best Buy provided on the VAT registration application form was an email address set up by Mr Beg. We accept the Appellant’s evidence that both the Appellant and Mr Beg had access to this email account.

[78]The VAT registration application was made on the basis that Best Buy had passed the compulsory registration threshold by 28 February 2019, and anticipated subsequent annual turnover of £100,000. In her oral evidence the Appellant said that she thought Best Buy’s annual turnover for the year ended 28 February 2019 was £100,000. This was contradicted by Mr Beg, who had said in cross-examination that he believed Best Buy’s turnover for this year was £30,000 and it was because the turnover was £30,000 that Best Buy had registered for VAT.

[79]It must be the case that either the Appellant’s estimate of turnover is inaccurate, or Mr Beg’s estimate of turnover is inaccurate (or that both estimates are inaccurate). Best Buy’s annual turnover was not set out in the financial statements filed for the year ended 28 February 2019. However, AH said in his witness statement: When the accounts to February 2019 were completed, I advised the client they were liable to register for VAT. I applied for VAT registration, and they were registered for VAT with effect from March 2019.

[80]We conclude that Mr Beg was better placed than the Appellant to know the turnover of the retail clothing trade he ran from Market Village. However, given we do not accept that Best Buy traded as a retailer from Market Village, and given the absence of any credible evidence that Best Buy traded as a retailer at this time, we do not accept that Best Buy’s turnover for the year ended 28 February 2019 was either £30,000 or £100,000. We find, on the balance of probabilities, that Best Buy did not trade as a clothing retailer in the year ended 28 February 2019.

[81]Best Buy was registered for VAT with effect from 1 March 2019.

Best Buy’s financial statements for the year ended 29 February 2020

[82]Best Buy’s financial statements for the year ended 29 February 2020 In the bundle was a copy of Best Buy’s financial statements for the year ended 29 February 2020, as filed at Companies House.

[83]The Appellant said that AH had also prepared these accounts, and this is again corroborated by AH’s witness statement. In his witness statement, AH said: In the February 2021, after the Self-Assessment Tax Return season, I chased up the client to get their documentation in to me in order that I could prepare the February 2020 Annual Accounts. In April 2021, at the time of agreeing the Financial Accounts for February 2020, …

[84]We find that AH prepared Best Buy’s financial statements for the year ended 29 February 2020, and that these accounts were finalised in the period February to April 2021. The copy of the accounts filed at Companies House is dated 30 April 2021.

[85]In cross-examination, the Appellant said that she had “potentially” seen these accounts for the year ended 29 February 2020, and that she knew they were being prepared but she had not approved them or signed them. The Appellant said that while she knew that AH had filed them, she did not know the exact figures. For the same reasons as given for the year ended 28 February 2019, we find on the balance of probabilities, that the Appellant approved the accounts for the year ended 28 February 2019 and those approved accounts were filed by AH.

[86]The accounts for the year ended 29 February 2020, showed that Best Buy had “cash in hand and at the bank” of £26,215, and debtors of £16,773. This is inconsistent with the Appellant’s description of Best Buy’s finances. For the same reasons as set out in respect of the year to 28 February 2019, we conclude that either the Appellant’s description of Best Buy’s finances, or Best Buy’s accounts for the year ended 29 February 2020, (or both) contain significant inaccuracies.

[87]We find, on the balance of probabilities, that both the Appellant’s description and Best Buy’s accounts are inaccurate. We conclude that there is no credible evidence that Best Buy traded as a clothing retailer in the year ended 29 February 2020. We find, on the balance of probabilities, that Best Buy did not trade as a clothing retailer in the year ended 29 February 2020.

Best Buy’s banking

[88]Best Buy’s banking The Appellant and Mr Beg both said, and we accept, that until 1 May 2020, Best Buy did not have a bank account of its own.

[89]Both the Appellant and Mr Beg said that Best Buy’s transactions went through the Appellant’s personal bank account. In his witness statement, Mr Beg said: The company initially could not get a bank account, so my wife used a personal account with Monzo. Later she was able to open a company bank account with Tide.

[90]Under cross-examination Mr Beg accepted that it was not the case that Best Buy could not get a bank account but instead it was the case that he did not consider that Best Buy needed a bank account, and that any bank would ask him to provide details such as Best Buy’s turnover. Mr Beg was not asked, and did not explain, why providing a bank with details of Best Buy’s turnover was a deterrent to Best Buy opening a bank account.

[91]The Appellant also said that, until the first Covid-19 pandemic lockdown, she did not consider Best Buy needed a bank account. The Appellant said that this was because Best Buy’s customers paid in cash, Best Buy’s stock was bought in cash and Best Buy paid rent for its premises in cash.

The Covid-19 pandemic

[92]The Covid-19 pandemic We take judicial notice that in early March 2020, the World Health Organisation declared the new illness of Covid-19 to be a pandemic. Countries across the world took action to try to halt the spread of this illness. The first lockdown in the UK due to the Covid-19 pandemic was announced on 23 March 2020. Lockdown in Scotland commenced on 24 March 2020. This required the closure of schools, nurseries and childminding businesses (except as regards the children of key workers), the closure of non-essential retail businesses, and constraints on citizens being permitted to leave their own home except for short periods to exercise, carry out essential tasks, or work (but only those who were key workers or could not work from home). Social distancing rules required individuals to stay two metres or more away from anyone who was not a member of their household. Scotland did not enter Phase 1 of the route map out of lockdown until 29 May 2020.

[93]The Appellant said, and we accept, that retail trading in clothing had to stop in March 2020 as it was non-essential retail. We find that Mr Beg was obliged to cease trading from Market Village during the first lockdown (and in all successive lockdowns in Scotland when non-essential retail trading was prohibited).

[94]The UK government introduced various measures to assist businesses with the financial difficulties caused by the pandemic and the effect of the lockdowns. It is necessary to refer to two of these measures: the Bounce Back Loans Scheme, and the Coronavirus Job Retention Scheme.

The Bounce Back Loans Scheme (“BBLS”)

[95]The Bounce Back Loans Scheme (“BBLS”) On 27 April 2020, the UK government announced a scheme would be introduced providing businesses with Bounce Back Loans (“BBL”) to assist during the pandemic. This scheme was open to applications from 9 a.m. on 4 May 2020.

[96]Mr Beg said that he had spoken to AH, and that AH had told him that he (Mr Beg) would have to make the application for a BBL.

Opening the Tide Bank account

[97]Opening the Tide Bank account Mr Beg said, and we accept, that during the Covid pandemic, he and the Appellant had made an application to Tide Bank for Best Buy to have a bank account. Mr Beg also said, and we accept, that Best Buy’s application for a bank account had been made so Best Buy could apply for a BBL. The panel was provided with bank statements from Best Buy’s bank account with Tide Bank for the period 1 May 2020 to 31 May 2022.

[98]When Mr Beg was asked what he had told Tide Bank about Best Buy’s turnover when he and the Appellant had applied to open a bank account for Best Buy, Mr Beg said he had informed Tide Bank that Best Buy’s annual turnover was £30,000.

Best Buy’s application for a BBL

[99]Best Buy’s application for a BBL Under cross-examination Mr Beg said that he and the Appellant had made an application to Tide Bank for a BBL for Best Buy. Mr Beg could not remember when this application was made. Mr Beg said that Tide Bank had told him that a BBL application could be made if Best Buy had a bank account but Best Buy’s subsequent application to Tide Bank for a BBL had been unsuccessful. Mr Beg told the panel that Tide Bank had said it had run out of funds.

[100]Mr Beg also said that he and the Appellant had tried making applications to many banks for a BBL, and they had been declined by them all.

[101]It is necessary to go into greater detail about what the Appellant told the panel about this aspect of events because of what the Appellant also says about a Mr KM. In her witness statement the Appellant said: I recall having provided the Company details and my photographic identification to a family friend, who claimed he would be able to assist with the obtaining of a Bounce Back Loan. He subsequently advised that I did not qualify for a Bounce Back Loan because the business did not have a company bank account, and was trading through a personal account. Whilst I cannot recall the exact date, the lack of a company bank account would mean it was before May 2020, when the company eventually opened a company business account.

[102]In her oral evidence, the Appellant told the panel that the following sequence of events occurred:(1) she and Mr Beg had together made a telephone call to Bank of Scotland and had asked about the possibility of Best Buy applying for a BBL;

(2) the Bank of Scotland had told them that Best Buy would not be able to apply for a BBL because it did not have a bank account. No other reason had been given by the Bank of Scotland for why Best Buy would not be able to apply for a BBL;

(3) following the call with the Bank of Scotland, there had been a gathering of family and longstanding family friends to mourn Mr Beg’s grandmother who had passed away a week before the pandemic lockdown began;

(4) at the gathering, the Appellant interacted with KM, who was attending the gathering as a friend of the Beg family. The Appellant had known KM since she was a young child;

(5) in their interaction at the gathering, the Appellant and KM had discussed BBLs. The Appellant had told KM that she was unsure how Best Buy could financially survive the pandemic;

(6) KM told the Appellant either that he himself had applied successfully for a BBL (either for himself or someone else), or that he knew a broker and had had successful dealings with that broker, and he (KM) would be able to help Best Buy. The Appellant told us that she understood from this conversation that if KM took relevant details and made a BBL application for Best Buy, this application would be likely to be successful;

(7) KM subsequently messaged the Appellant, and there was then a telephone call between KM and the Appellant. During the course of the telephone call, KM advised the Appellant that Best Buy required a bank account to apply for a BBL, and Best Buy could apply for a Tide Bank account. KM said some banks were no longer offering BBL but Tide Bank was still offering BBL;

(8) the Appellant and Mr Beg made an application to Tide Bank to open a bank account for Best Buy. As part of this process the Appellant provided Tide Bank with information to establish her identity;

(9) about a week or two after Best Buy’s bank account was opened, KM asked the Appellant to provide him with information. The Appellant was “fairly certain” that she gave KM a photograph of her driving licence via WhatsApp and the name of Best Buy but thought that KM already knew Best Buy’s address;

(10) after a further two or three weeks, KM told the Appellant in a telephone call that Best Buy’s application for a BBL had been unsuccessful.

[103]The Appellant said that she could not remember the dates on which these events took place, and that her dates could be mixed up, but that events had occurred in the order we have set out above. The Appellant also said that she had deleted her WhatsApp memory a few times since 2020 as the memory filled up, so it was not now possible to find a copy of the message she had sent to KM; and that she did not think she had checked her WhatsApp account when she first became aware of HMRC’s interest in Best Buy.

[104]The Appellant said in her witness statement, and at the hearing, that on the advice of her litigation advisor JO she had not attempted to approach KM and that she had not reported KM to the police. The Appellant also said (although this was not in her witness statement) that KM was known to the police because of his involvement in illegal drugs, and she understood he had since moved to Dubai.

[105]Although the Appellant could not tell the panel the dates on which the sequence above occurred, if these events did occur then events 1-8 of the sequence could only have taken place between 27 April 2020 (the date on which the BBL scheme was announced) and 1 May 2020 (the date on which Best Buy’s bank account with Tide was opened) inclusive.

[106]The account given by the Appellant in her witness statement is different to the account given in oral evidence in that, in her witness statement, the Appellant said KM made the BBL application before Best Buy had its own bank account whereas in her oral evidence the Appellant told us KM made the BBL application after Best Buy had opened its own bank account. We do not accept either version of events given by the Appellant because:(1) It is not credible that a gathering of family and family friends was organised to mourn Mr Beg’s grandmother in the period 27 April to 1 May 2020, as the UK was in the first few weeks of its first lockdown for all of this five day period, and such gatherings were prohibited;

(2) While it would be possible for KM to have lied to the Appellant in the period 27 April – 1 May 2020 about having already made, or been involved in, a successful application for a BBL, it is not credible that the Appellant (as a person who was aware of the BBL scheme and interested in Best Buy applying for a BBL) would not have known or checked basic details about the BBL scheme, and thus been aware that the BBL scheme did not open for applications until 4 May 2020. Consequently it is not credible that the Appellant would not be aware that anyone who, in the period 27 April – 1 May 2020 claimed already to have made a successful BBL application, could not be telling the truth;

(3) The Appellant and Mr Beg were able, without help, to make an application to Tide Bank for a bank account for Best Buy, and it is not credible that they could not themselves have made an application to Tide Bank for a BBL;

(4) The Appellant’s evidence that she believed she and Mr Beg would need the help of KM to apply for a BBL (and so gave him information to enable him to make a BBL application for Best Buy) is directly contradicted by Mr Beg’s oral evidence that he and the Appellant had themselves applied to Tide Bank (and other banks) for a BBL.

[107]Having rejected both versions of events given by the Appellant we find, on the balance of probabilities, that the version of events given by Mr Beg is true. We find that the Appellant and Mr Beg themselves applied to Tide Bank for a BBL after having opened a bank account with Tide Bank specifically so that they could make such a BBL application.

[108]As a consequence of rejecting the Appellant’s evidence on this point, we do not accept that there was any reason for the Appellant to have sent a photograph of her driving licence to KM. We find, on the balance of probabilities, the Appellant did not send a photograph of her driving licence to KM.

The Coronavirus Job Retention Scheme (“CJRS”)

[109]The Coronavirus Job Retention Scheme (“CJRS”) Mr Beg said that Best Buy had three or four part-time employees. We accept that, when asked about employees, Mr Beg potentially understood the questions as referring to the employees other than himself. In the bundle before us is a sample PAYE return submitted on an unknown date on behalf of Best Buy. This PAYE return shows that there were five employees, including Mr Beg. Although the Appellant said that she worked at the retail unit on Sundays, she was not shown on the sample PAYE information as being one of Best Buy’s employees. We make no findings about why Best Buy, which we have found was not trading as a clothing retailer, had five employees.

[110]The Appellant and Mr Beg both said, and we accept, that AH managed PAYE on behalf of Best Buy. This is corroborated by AH’s witness statement in which he says that he undertook payroll services for Best Buy.

[111]Mr Beg said he did not really have any discussions about PAYE with AH because he found AH to be very abrupt. Mr Beg said that as soon as AH completed any work that he was due to undertake for Best Buy, AH was paid for that work.

[112]Mr Beg said that it was AH who had applied for CJRS payments on behalf of Best Buy. The Appellant also said that AH made the claim. The Appellant accepted that she and Mr Beg would have asked AH to do this for Best Buy.

[113]We find that Mr Beg and/or the Appellant asked AH to make a CJRS claim on behalf of Best Buy, and that this claim was successful. The bank statements in the bundle demonstrate that the first CJRS grant of £7,417.18 was paid into the Appellant’s personal bank account on 29 April 2020.

[114]Monthly CJRS payments continued to be made, initially to the Appellant and then to Best Buy (see further below).

When Best Buy is said to have ceased trading as a clothing retailer

[115]When Best Buy is said to have ceased trading as a clothing retailer In her witness statement, the Appellant stated: In March 2020, the business had to close due to Covid. Throughout this period the Market Operator postponed collection of the rent. When the restrictions eased, the Market Operator was looking for backdated rent. During Lockdown the company could not avail itself of the Council grants as it was not the rate payer, the Market Operator was. With no income for such a long period, I had no option but to close the business. I did not re-open since closing in March 2020.

[116]This account is supported by the witness statement of Mr Beg. In addition, in his witness statement, AH stated: Covid Lockdown happened in March 2020 and I was aware the business had ceased trading, due to not being an essential retailer… In April 2021, at the time of agreeing the Financial Accounts for February 2020, I was informed that the business had not traded since the start of lockdown, and was unlikely to restart.

[117]At the hearing the Appellant said it had not been possible for Best Buy to resume trading once the initial lockdown restrictions were eased. The Appellant said that she and Mr Beg had tried to resume trading in August 2020 but they did not have enough stock, Market Village were seeking backdated rent, and the rent arrears were such that it was not possible to keep the retail unit open. When pressed, the Appellant said that there were possibly very minimal clothing retail sales between August 2020 and the end of 2020, but the retail unit had closed in “maybe December, maybe before”. The Appellant said that the retail unit had closed by December 2020 at the latest.

[118]However, in his introductory email to HMRC, on 1 June 2022, Mr JO (the Appellant’s representative in this litigation from 1 June 2022) stated: The company deregistered for VAT in or around April 2021 and [the Appellant] left the premises. She is now an employee working in an office environment. I see the penalty is 100%, so the VAT Due is the £1,492,862. That equates to Gross sales of almost £9 million. She denies totally any knowledge of such a level of business, and deregistered because the business was trading below the VAT threshold, and not making enough to pay a wage and the expenses, such as unit rent.

[119]On 25 August 2022, JO wrote to HMRC: The business ceased trading in April 2021.

[120]The Appellant told the panel that she did not know why JO had given the date of April 2021 for the cessation of trading. In cross-examination the Appellant agreed that JO would have acted on basis of information that she had given him but said that, as far as she was concerned, Best Buy had ceased trading by the end of 2020.

[121]Although it was not drawn to our attention by either of the parties, we note that Best Buy’s bank statements show a payment of £260 to “Paul Jain” on 22 April 2021. Paul Jain is the trading name of one of the wholesalers from whom receipts were provided. There are also payments from Best Buy’s bank account on 31 March 2021, 17 May 2021 and 30 May 2021 which include the reference “stock” or “goods”. These four payments suggest that stock was bought in March, April and May 2021 using funds in Best Buy’s bank account.

[122]We have found that Best Buy did not trade as a clothing retailer in the years ended 28 February 2019 or 29 February 2020. As Best Buy did not trade as a clothing retailer, there cannot be any date on which Best Buy ceased such a trade. We find, on the balance of probabilities, that the clothing retail trade from Market Village in the period shown by the Market Village invoices was carried out by Mr Beg, trading as a sole trader. We find, on the balance of probabilities, that the purchases of stock in March to May 2021 were made on behalf of Mr Beg.

[123]We accept that Mr Beg’s clothing retail trade ceased during the Covid-19 lockdowns but we make no findings about at what date (if any) this trade resumed. Given the conflicting oral and documentary evidence about the date on which the clothing retail trade ceased, including the purchases shown as late as May 2021, we make no finding about the date (if any) on which Mr Beg ceased to trade as a clothing retailer.

Continuation of the CJRS payments

[124]Continuation of the CJRS payments Mr Beg said that the employees (by which we understand him to mean the other employees) were let go “after Covid”. Mr Beg dated this to around the time when Market Village had started to ask for payment of back-dated rent. We find, on the balance of probabilities, that this was either in August 2020 (when the Appellant said that she and Mr Beg tried to re-commence selling from Market Village) or December 2020 (when the Appellant said that the business had definitely ceased).

[125]Mr Beg said that, when the other employees were let go, he told AH of this fact at the time that the employees were told.

[126]The Appellant’s bank statements show that CJRS grants continued to be paid into her bank account every month from May 2020 to January 2021. CJRS grants were then paid into Best Buy’s bank account (see below) from February 2021 to September 2021 inclusive. We take judicial notice of the ending of the CJRS at the end of September 2021.

[127]Neither the Appellant nor Mr Beg was able to explain why CJRS payments continued to be paid into the bank accounts of first the Appellant, then Best Buy, for several months after the last of the dates on which they both said both that Best Buy had no employees (other than potentially Mr Beg) and that Best Buy had ceased to trade.

[128]The Appellant said that it was hard to remember dates but the CJRS grant was paid, in cash, to the former employees every month in which it was received. It is not credible that the Appellant (who had previously advised on employment issues) considered it necessary to pay the CJRS grant to individuals once those individuals had ceased to be Best Buy’s employees.

[129]The Appellant said that the CJRS payments were made to the employees by “whoever was in at the time” which she then clarified to be either herself, Mr Beg or AH. We find that the Appellant’s reference to “whoever was in at the time” could only be a reference to whichever person was in the retail unit at the relevant time. However, the Appellant said that Best Buy’s trade from Market Village had ceased by the end of 2020 at the latest, so there would not have been any reason for her or Mr Beg to be present at a retail unit in Market Village after December 2020. The panel was not told of any reason for AH to have been at the retail unit at any time.

[130]The Appellant also said that, if AH was to pay the former employees, she or Mr Beg would go to AH’s office to hand the cash to him so that he could pay the former employees. It is not credible that either the Appellant or Mr Beg would have travelled to AH’s office to give him cash which he could pay to Best Buy’s former employees. If the Appellant wished to provide funds to AH, she could have transferred money from her bank account, or from Best Buy’s bank account, as the bank statements in the bundle show happened on other occasions. The bank statements show that, in addition to the electronic payments made from Best Buy to AH every month when the CJRS grant was received, there was also an electronic payment from Best Buy to AH on 7 September 2020 marked “Hxxx Rxxxxx PAYE”, demonstrating Best Buy was able to make one-off electronic payments to AH.

[131]It is even less credible that, each month between January 2021 to September 2021 inclusive, either the Appellant, Mr Beg or AH would travel to a unit at Market Village which (the Appellant and Mr Beg both said) was no longer rented, to give thousands of pounds in cash to people who Best Buy no longer employed. The suggestion that the Appellant returned to the Market Village retail unit to give cash to former employees is particularly incredible given that the Appellant also said that she did not return to that retail unit to look for Best Buy’s missing sales book.

[132]We do not accept that the Appellant was telling the truth when she said that the CJRS grants paid in 2021 were paid to Best Buy’s former employees every month until the CJRS ended at the end of September 2021.

The VAT returns

[133]The VAT returns In the bundle was a schedule prepared by HMRC of the nine VAT returns that had been filed on behalf of Best Buy. These were quarterly returns for the periods ending 05/19, 08/19, 11/19, 02/20, 05/20, 08/20, 11/20 and 02/21, and the final return to 27 April 2021 (when Best Buy was compulsorily de-registered).

[134]All of the VAT returns were submitted as nil returns. HMRC subsequently adjusted the final three returns. The Appellant accepted that, on the basis of her oral evidence about Best Buy’s trading, it was incorrect for Best Buy to have filed nil returns for all of these periods.

[135]In his witness statement, AH stated: No VAT returns were ever prepared by me or submitted.

[136]This is clarified later in the same witness statement as AH also states: I note that I completed the Final VAT Return, which covered the period to 27 April 2021. It was a NIL Return, as for the relevant period, I was advised there had been no trading.

[137]Mr Beg said that he had not submitted any of the VAT returns, it had been AH’s job to submit the VAT returns and that was what AH had been paid for. Mr Beg also said that he thought that Best Buy would register for VAT “and that was it”.

[138]When questioned further, Mr Beg said that AH called when the VAT returns were due, and he and the Appellant had given AH all that AH asked for by way of invoices to enable the returns to be filed. On the basis of the Appellant’s evidence that Best Buy’s retail sales were recorded only in a shorthand book, and on the basis that the Appellant was not able to provide HMRC or the Tribunal with any invoices issued by Best Buy, we do not accept that there were any retail sales invoices issued by Best Buy which Mr Beg could have provided to AH.

[139]The Appellant also said that AH submitted all of the VAT returns. When pressed, the Appellant initially said that the returns had not been submitted on the basis of information provided by her but then said that she could not say for certain. The Appellant then said that throughout she had relied upon guidance from AH, and that “he said, or it was agreed” that the returns would be nil returns. When pressed again the Appellant said it was AH’s job to have guided her and Mr Beg, and she accepted she was “involved in the process” but considered it likely that she was seeking guidance from AH. The Appellant also said that while she accepted AH needed to have information, she did not think that she had given AH any information.

[140]In respect of the final VAT return, HMRC suggested to the Appellant that AH could only have filed a nil return on the basis of instructions. When asked whether she had instructed AH to file a nil return, the Appellant told us that “Mr Beg must have”.

[141]On the basis of AH’s witness statement, we find that AH filed a nil final VAT return for Best Buy on instructions. In his witness statement, AH does not specify who gave him those instructions. We have considered the Appellant’s assertion that Mr Beg gave AH the instruction to file a nil final VAT return, and taken into account that Mr Beg was far more involved than the Appellant in the day to day running of the clothing stall. However, we have also noted that the Appellant was Best Buy’s sole director, that she was the person who gave AH the instruction to register Best Buy for VAT, and also the instructions to file both sets of Best Buy’s accounts, and that the Appellant became Best Buy’s director because she wanted “the final say”. We find, on the balance of probabilities, that the instruction to AH to file Best Buy’s final VAT return came from the Appellant.

[142]We conclude that the first eight VAT returns could only have been submitted by one of AH, Mr Beg or the Appellant, or two or more of these three people acting together. AH accepted in his witness statement that he had filed the final return on instructions but stated he did not file the preceding eight returns.

[143]If AH had undertaken the filing of Best Buy’s first eight VAT returns, then we would expect to see evidence that AH had been paid for this work (as Mr Beg told the panel that AH had been paid to file VAT returns, and also that AH was paid for work immediately after he had undertaken that work). We have considered the bank statements available, which overlap with the filing of the later VAT returns. Other than the monthly payments to AH in the bank statements which coincide with Best Buy’s receipt of CJRS grants (and which we consider are linked to managing payroll), and one payment on 7 September 2020 with a PAYE reference, there are no payments to AH. There are no quarterly payments which would reflect a fee paid to AH for the filing of a quarterly VAT return.

[144]We find that, on the balance of probabilities, the first eight VAT returns for Best Buy were not filed by AH. We find on the balance of probabilities that Best Buy’s first eight VAT returns were filed either by Mr Beg, or by the Appellant, or by both acting together.

HMRC’s investigation

[145]HMRC’s investigation In late 2020 and early 2021, Officer Pearson’s role included monitoring a trader called Merchant Trader Limited (“MTL”). Each VAT return submitted by MTL was subject to a full check: MTL was required to send HMRC sales and purchase records. From 1 November 2020, the invoices MTL provided to HMRC included invoices that MTL said had been issued to it by Best Buy.

[146]For this appeal hearing, Officer Pearson prepared a schedule of certain invoices which MTL had submitted to support its own VAT returns. In his witness statement Officer Pearson said that these invoices were for the period 01/21 but, as they also cover dates in February and March 2021, We find that the schedule is for the periods 01/21 and 04/21. These invoices were said by MTL to have been issued to it by Best Buy, in respect of metals sales from Best Buy to MTL.

[147]There were 12 invoices for the period ended 01/21 and 44 invoices covering the period 04/21. Best Buy and MTL operated on different VAT return staggers. The schedule prepared by Officer Pearson from the invoices he had seen show that Best Buy had made sales to MTL of £12,790,032 between 1 November 2020 and 2 March 2021, with VAT due of £699,200 in the VAT period ended 11/20, VAT due of £1,423,265 in the VAT period ended 02/21, and VAT due of £10,205 in its final VAT period.

[148]One of the Best Buy invoices seen by Officer Pearson was included in the bundle. This is numbered invoice 1,000. The invoice bears Best Buy’s VAT registration number and company number, and the address of “Unit 21, Forge Shopping Centre”. The omission of “Market Village” reflects the address given in Best Buy’s VAT registration application. Officer Pearson told us that all of the Best Buy invoices he had seen were in the same format.

[149]In addition to the 56 invoices, MTL also provided HMRC with their evidence of having conducted due diligence before trading with Best Buy. This material included a photocopy of a driving licence. This appeared in the hearing bundle. Although the image was blurry, we find that this was a photocopy of the Appellant’s driving licence.

[150]None of the payments in the 56 invoices appears in the bank statements for Best Buy or the Appellant. Officer Pearson told the panel that MTL had shown him evidence that it had made payments through an alternative banking platform for the metal shown on those invoices. Officer Pearson said that, on the alternative banking platform evidence provided by MTL, the specific recipient of the payments had been shown and Best Buy was shown as a payment recipient.

HMRC’s opening letter to Best Buy

[151]HMRC’s opening letter to Best Buy Officer Pearson attempted to contact Best Buy as part of his verification of MTL’s returns, and on 16 April 2021, he wrote to Best Buy. We find that this letter was correctly addressed to Best Buy (i.e. “Market Village” was included as part of that address). This letter asked the recipient to contact Officer Pearson within seven days, and warned that in the absence of contact Best Buy would be de-registered.

The Appellant’s reporting of her driving licence lost or stolen

[152]The Appellant’s reporting of her driving licence lost or stolen The Appellant’s witness statement does not refer to her making a report to the Driver and Vehicle Licensing Agency (“DVLA”) that her driving licence had been lost or stolen. However, HMRC had referred to the Appellant making such a report in their skeleton argument, and they submitted that the Appellant’s report to the DVLA was likely to have been made after the Appellant had received Officer Pearson’s letter of 16 April 2021.

[153]The Appellant said in her oral evidence that, on an unknown date, she had been unable to find her driving licence, and so she had collected a form from a local post office to report her driving licence lost or stolen. The Appellant said this form had been completed and posted to the DVLA. The Appellant said she had telephoned the DVLA more than once about this as it took them a few weeks to process her report. The Appellant suggested that this delay was due to the pandemic.

[154]In the bundle is a report from the DVLA that shows that a driving licence in the name of the Appellant was valid from 3 February 2020 to 18 April 2021. The report indicates that the DVLA received a report of this licence being lost or stolen on 17 April 2021. The photograph is a likeness of the Appellant. On the basis of the similarity between the photograph on the DVLA report and the photocopy provided by MTL, we find that when MTL conducted their due diligence MTL were either shown the Appellant’s driving licence, or a copy of the Appellant’s driving licence, and they took a copy of what they were shown.

[155]HMRC’s submissions were that it was more likely than not that the Appellant had received Officer Pearson’s letter of 16 April 2021 on 17 April 2021, and that the Appellant’s immediate reaction was to make an online report to the DVLA of the loss of her driving licence. The Appellant said that she had not received the letter of 16 April 2021 because Best Buy had ceased trading and left Market Village by this date, and that it was a coincidence that her report to the DVLA report was processed one day after HMRC sent their letter.

[156]The Interpretation Act 1978 provides that, unless the contrary is proved, service by post is deemed to have been effected at the time the letter would be delivered in the ordinary course of post. While Officer Pearson’s letter of 16 April 2021 was not required to be served, we find that this correctly addressed letter was sent and received in the ordinary course of post. A letter sent first class is usually delivered one or two days (excluding Sunday) after being posted. We take judicial notice that 16 April 2021 was a Friday. Therefore, in the ordinary course of post, the letter would have been delivered to Unit 21 Market Village on either Saturday 17 April 2021 or Monday 19 April 2021.

[157]We have found Best Buy did not trade as a clothing retailer from a unit at Market Village. There is no evidence before the Tribunal on which we can make any finding about how quickly post delivered to Unit 21, Market Village in April 2021 would come to the attention of a trader who had not, at least during the period February 2018 to September 2019, traded from Unit 21. We find, on the balance of probabilities, that Officer Pearson’s letter was not delivered to Best Buy or the Appellant by 17 April 2021. We accept the Appellant’s explanation that it was coincidental that her report to the DVLA was processed one day after Officer Pearson’s letter was sent.

Best Buy’s de-registration from VAT

[158]Best Buy’s de-registration from VAT We accept Officer Pearson’s evidence that Best Buy was compulsorily de-registered on 27 April 2021, after there was no response to his letter of 16 April 2021.

[159]In his witness statement AH states: I understand HMRC are saying they compulsorily deregistered the client for VAT purposes. I have been shown a copy of the HMRC Deregistration Letter dated 27 April 2021. It states that the VAT Number has been cancelled with effect from 16 April 2021. It may be a co-incidence, but I applied to deregister the client for VAT purposes. I note that I completed the Final VAT Return, which covered the period to 27 April 2021. It was a NIL Return, as for the relevant period, I was advised there had been no trading.

[160]In her evidence the Appellant said that AH had tried three times to de-register the Appellant, and that he had told her this. It is not necessary for us to make any findings about whether AH applied to de-register Best Buy after Best Buy had already been compulsorily de-registered by HMRC.

[161]On the basis of statements in the witness statements of AH and Officer Pearson, we find that AH submitted Best Buy’s final VAT return, which was again a nil return, on 31 May 2021.

The VAT assessments and penalty issued to Best Buy

[162]The VAT assessments and penalty issued to Best Buy On 12 January 2022, HMRC issued VAT assessments to Best Buy for the periods 11/20, 02/21 and the period to 27 April 2021. The total amount assessed was £2,132,670.

[163]These VAT assessments were issued to Best Buy at “Unit 21, Forge Shopping Centre”. “Market Village” was omitted from this address. These assessments were correctly addressed in the sense that they were addressed to the address Best Buy had provided to HMRC when it registered for VAT. However, this address was not the correct address for a retail unit in Market Village. We find, on the balance of probabilities, that these VAT assessments were not received by Best Buy in the ordinary course of post. We find that these assessments came to the attention of the Appellant in early June 2022 when HMRC provided a copy to the Appellant’s then representative JO.

[164]The assessment letter included the warning to Best Buy that penalties were being considered. In the absence of any response from Best Buy to the VAT assessments, on 13 April 2022, HMRC wrote to Best Buy to inform it that HMRC intended to issue a penalty of £1,492,869 and that any further information should be received by HMRC by 13 May 2022. The proposed penalty was due to HMRC considering there to be an inaccuracy in the last three VAT returns filed by Best Buy. HMRC suggested the penalty would be set at 70% of the VAT that HMRC considered had been omitted from these last three VAT returns on the basis that Best Buy’s behaviour was deliberate. This letter of 13 April 2022 was also issued to Unit 21, Forge Shopping Centre address. We find, on the balance of probabilities, that this letter was not received by Best Buy in the ordinary course of post. We find that this letter came to the attention of the Appellant in early June 2022 when a copy was provided to JO.

[165]On 16 May 2022, HMRC issued a penalty of £1,492,869 to Best Buy. This penalty was issued to the Unit 21, Forge Shopping Centre address. We find, on the balance of probabilities, that this letter was not received by Best Buy in the ordinary course of post. We find that this letter came to the attention of the Appellant in early June 2022.

The personal liability notice issued to the Appellant

[166]The personal liability notice issued to the Appellant On 16 May 2022, HMRC issued a Personal Liability Notice (“PLN”) to the Appellant making her liable for 100% of the penalty issued to Best Buy. This PLN was sent to the Appellant at her home address.

[167]Also on 16 May 2022, HMRC wrote to Best Buy (at the Unit 21, Forge Shopping Centre address) to notify Best Buy that the Appellant had been made personally liable for the penalty. This letter explained that the total amount due remained the same, so if the Appellant paid the amount of the penalty, no amount would be due from Best Buy.

[168]We find that HMRC’s letter notifying the PLN was received by the Appellant in the ordinary course of post. Following receipt of that letter, the Appellant instructed JO to assist her and Best Buy in their interactions with HMRC.

[169]On 1 June 2022, JO emailed Officer Lucas to ask for re-consideration of the decision reached. In this letter JO wrote: Having been out of the unit since April, I assume that any visit by HMRC would have been unable to locate the company. Any correspondence, pre-assessment letter, assessment, penalty explanation letter and penalty would have gone to the business address. There was no mail redirection, as it was never expected it would be required. With my own knowledge of VAT, I suspect that someone has hijacked Best Buy’s details and used it to facilitate an MTIC type fraud, by virtue of the VAT assessment. As far as the client is concerned, it is not her, and I would be looking to do what is necessary to have this proved to you and to have the assessment and penalty notices withdrawn. I am happy to discuss matters by telephone to try and move matters on. I would like copies of any correspondence issued to Best Buy in order that I can consider and respond.

[170]Officer Lucas and JO spoke by telephone on 6 June 2022. On 15 June 2022, Officer Lucas emailed JO asking him to clarify if he was seeking a review of the VAT assessment and penalty issued to Best Buy. After further emails, JO clarified on 16 June 2022: On the basis that the Company and Director have been assessed for VAT and Penalty, then yes, I require a formal reconsideration of the assessment, the Penalty and the decision to transfer the penalty to the Director personally.

[171]On 20 June 2022, JO sent Officer Lucas bank statements, a witness statement from the Appellant, two purchase invoices (with the explanation that there were others and they were similar) and an explanation that sales were in cash. On 25 August 2022, JO provided Officer Lucas with answers to specific questions and with copies of purchase invoices (noting that they were effectively till receipts provided by various wholesalers) and rent invoices. JO told Officer Lucas that Best Buy’s sales book was still being looked for.

[172]On 26 August 2022, Officer Lucas informed JO that she had not found the evidence presented by the Appellant to be sufficient to demonstrate that Best Buy’s VAT number had been hijacked, and so HMRC still considered the Appellant to be the liable company officer. JO replied on the same day: Understandably disappointed with the response. By the very nature of a “hijack” you would not expect to find any trace with the records of the ‘true’ business, given their position of no knowledge. As HMRC have raised VAT Assessments against the company, I would assume that HMRC know the purchasing company which has used “invoices” from Best Buy to recover VAT. What if any Due Diligence have they produced? To which bank account did they send money? What does that bank show? Where did the money go after that bank? Who does it link to? If they sent it to a third party, on whose instructions? What email address is used? What telephone numbers were provided by this “hijacker” on the “invoices”? I acknowledge that many of the questions above could only be answered by HMRC exercising their enforcement and investigative powers. However, given the magnitude of the fraud, I would expect HMRC to have already utilised those powers during their enquiry. Bank accounts do not require Production Orders. I would like to think this would have perhaps demonstrated that [the Appellant] had no involvement.

[173]JO asked for further material and explanation to be provided by HMRC to assist in the Appellant seeking a review. JO also referred to HMRC’s internal guidance on issuing PLNs, and noted that one of the requirements in that guidance was that HMRC should establish that either the director had gained, or attempted to gain, personally from the inaccuracy or that the company was, or was likely to become, insolvent. JO accepted that the second of these alternatives was met as Best Buy had ceased trading and would never have had the ability to pay the penalty.

The review decisions

[174]The review decisions On 27 September 2022, HMRC issued their review decision to the Appellant in respect of the PLN that had been issued. On the same day HMRC issued their review decision to Best Buy in respect of the VAT assessments and penalty. The VAT assessments, penalty and PLN were all upheld without variation. The letter addressed to Best Buy was sent care of the Appellant’s home address.

Appeal to tribunal

[175]Appeal to tribunal On 30 September 2022, JO filed two appeals with the Tribunal: one for Best Buy and one for the Appellant.

[176]Best Buy’s appeal was against the penalty issued by HMRC, and the Appellant’s appeal was against the PLN. Both appeals were made on the basis that Best Buy had been hijacked and that the Appellant was not responsible for the metal trading which formed the basis of the VAT assessments HMRC had issued.

[177]There was no appeal by Best Buy against the VAT assessments.

[178]The Tribunal acknowledged and served both appeals and directed HMRC to file and serve a combined Statement of Case. This Statement of Case was filed and served on 1 February 2023. The parties subsequently engaged in Alternative Dispute Resolution but this proved unsuccessful. Directions were issued to enable the parties to prepare for a hearing.

[179]On 29 January 2024, JO came off the record as the representative for the Appellant. The Appellant indicated that she was seeking an alternative representative but, in the absence of any further communication, on 18 April 2024, Judge Scott issued an Unless Order to the Appellant requiring her to confirm that she wished to proceed with her appeal. The Appellant was also asked to confirm whether she wished to cross-examine one of HMRC’s witnesses who would not be able to attend a hearing on the (then listed) dates of 29-31 May 2024.

[180]The Appellant confirmed she did wish to proceed and question that witness, but stated that she had no representative and that she could not afford to pay for professional representation. On 10 May 2024, Judge Brooks directed that the hearing would continue on 29-31 May 2024 but (as the Appellant was no longer represented) HMRC should prepare the hearing bundle. HMRC duly prepared a hearing bundle and they served a copy upon the Appellant on 29 May 2024. On 14 May 2024, Judge Brooks postponed the hearing, and directed the parties to let the Tribunal know of dates at the end of 2024 when they would be available to attend a rescheduled hearing.

[181]On 25 June 2024, at the petition of HMRC, a Sheriff ordered the compulsory winding up of Best Buy.

[182]The Tribunal hearing was re-listed for 26 and 27 September 2024. However, this hearing was postponed on the instruction of Judge Rankin, due to the Tribunal having been notified of the winding up of Best Buy. On 20 November 2024, the liquidators confirmed that they did not wish to proceed with Best Buy’s appeal against the penalty that had been issued.

[183]The Appellant confirmed to the Tribunal that she still wished to proceed with her appeal against the PLN. After some confusion and delay caused by erroneous directions being issued, the hearing of the Appellant’s appeal was fixed for 13-14 November 2025.

[184]On 11 November 2025, a new representative for the Appellant came on the record and asked for the hearing to be postponed. The new representative stated that neither he nor the Appellant had received a copy of the hearing bundle. Judge Bailey refused this application on the basis that an electronic bundle had been served on the Appellant on 29 May 2024, and a paper copy provided on 19 September 2025.

[185]At the commencement of the hearing on 13 November 2025, the Appellant explained that the new agent was a family friend (who would not be representing her at the hearing) and she had asked him to seek an adjournment because she had been confused about what she had received. The Appellant confirmed she had received the bundle and was ready to proceed.

[186]Following the conclusion of the hearing, the panel was provided with a copy of the Insolvency Service’s decision in respect of the Appellant’s conduct when in control of Best Buy. The Insolvency Service concluded: [The Appellant] failed to ensure that [Best Buy] maintained and/or preserved adequate accounting records between 07 February 2018 and 25 June 2024, or in the alternative, she failed to deliver up such records as were maintained to the Liquidator. Consequently it has not been possible to establish: - The full nature of Best Buy’s activities, and whether such activities related to a genuine trading purpose; - Best Buy’s total income and expenditure between incorporation on 29 February 2020 This appears to be a typographical error, transposing Best Buy’s date of incorporation and the date of Best Buy’s end of year. and liquidation on 25 June 2024; - The purpose of payments from the company bank account totalling £40,798 between 23 June 2020 and 07 October 2021; - Best Buy’s actual VAT liability for the period 01 September 2020 to 24 April 2021, in respect of which HMRC raised assessments totalling £2,179,404 and associated penalties of £1,492,868; - Best Buy’s eligibility to receive Coronavirus Job Retention Scheme payments totalling £93,104 between April 2020 and 23 September 2021 and the purpose for which such funds were used; - What became of Best Buy’s total assets prior to liquidation, which according to filed accounts to 29 February 2020, approved by [the Appellant] on 30 April 2021, had a value of £52,495; and - The position of any director’s loan accounts at liquidation.

[187]As a consequence of these conclusions, the Insolvency Service disqualified the Appellant from being a company director for a period of seven years from 28 November 2025.

Burden of proof

[188]Burden of proof The standard of proof in this appeal is the civil standard, the balance of probabilities.

[189]In an appeal against a penalty or a PLN, broadly speaking, the onus of proof is upon HMRC. However, this broad statement does not make clear what, precisely, HMRC must establish when there is an appeal against a penalty or PLN, and the size of that penalty or PLN is based upon a tax liability.

[190]Mr Tosh very properly drew our attention to the Upper Tribunal decision in HMRC v Sintra Global and Malde

[2024] UKUT 00346 (TCC)

which departed from the Upper Tribunal decision in HMRC v Zaman

[2022] UKUT 00252 (TCC)

. The conflict between these two Upper Tribunal decisions, both of which were binding upon the First-tier Tribunal, made it unclear precisely which aspects it was necessary for HMRC to establish when there was an appeal against a penalty or PLN based upon a tax liability, and what aspects it was necessary for an appellant to prove.

[191]However, since the hearing, we have had the benefit of the Court of Appeal’s decision in HMRC v Sintra Global and Malde

[2025] EWCA Civ 1661

, which has resolved this conflict. After reviewing the authorities, Sir Launcelot Henderson, giving the decision of the Court of Appeal in Sintra Global, stated (at paragraphs 127-130): … it seems clear that if Global had pursued an appeal against the original assessment to unpaid excise duty of approximately £14.18 million (see [12] above), the burden would have been on Global to displace the assessment in the usual way. So why, it may be asked, should Global be relieved of bearing the burden of proof on those matters merely because the question arises in the context of a linked PLN issued to Global’s controlling director? This question brings us to the issue at the heart of the appeal, and to HMRC’s core submission that where in penalty proceedings under schedules 24 or 41 of FA 2007 and FA 2008 respectively a taxpayer wishes to challenge the underlying tax liability on which the penalty is based, the legal burden should rest on the taxpayer to show that the underlying tax liability is wrong, in the same way as it would on an appeal by the taxpayer (or a related company) against the relevant assessment.128. I have not found this an easy question, but on balance I have concluded that HMRC’s core submission should be accepted. The factor which weighs with me most strongly in so concluding is the arbitrary and anomalous results which would follow if the legal burden of proof on the issue of underlying liability admittedly rests on the taxpayer if the question is determined in separate proceedings, typically before imposition of the penalty, or if it is determined in concurrent proceedings at the same time as the penalty; but not if it is determined in separate penalty proceedings where, if the taxpayers are right, and as both the UT and the FTT have held, the burden lies on HMRC to establish every aspect of the penalty, including any challenge to the underlying tax liability. The taxpayers seek to justify this result by arguing that the imposition of penalties differs in principle from the resolution of ordinary tax disputes, and it is therefore unsurprising if the burden rests on HMRC to establish every element of liability to the penalty (subject to any express statutory provision to the contrary). But this argument, although superficially attractive, does not in my opinion meet the objection of principle that such an approach would indirectly subvert the long-established and salutary rule that the legal burden of proof normally lies on the taxpayer to displace an assessment to tax.

129. It cannot be right, in my view, that the burden should shift to HMRC merely because the taxpayer wishes to raise the issue of an underlying liability to tax as a defence to penalty proceedings. Not only would such a result be inconsistent with the principles which justify the normal rule, the most important of which is that the taxpayer should normally have access to all the information needed to resolve his tax affairs, but it would give rise to the risk of inconsistent decisions if the same question of underlying liability were determined differently depending on the stage at which it arises. Moreover, it would risk creating a perverse incentive for the taxpayer to avoid appealing an underlying assessment, when the burden would on normal principles be on the taxpayer to displace the assessment, but then to raise the issue as a defence to related penalty proceedings, when the burden would be on HMRC to justify the assessment. That risk is all the more apparent when the underlying assessment is on a company controlled by the taxpayer, which may well have no or insufficient assets to satisfy a tax judgment, and a penalty of approximately the same amount is then imposed on the taxpayer via a PLN or DLN.

130. The right solution in principle to this conundrum, in my judgment, is that in penalty proceedings the burden should normally lie on HMRC to establish the primary facts which need to be proved to justify the imposition of the penalty, but if the taxpayer wishes to contend in his defence that an underlying liability to tax which underpins or is reflected in the penalty was wrong, a separate legal burden rests on him to prove it, in the same way as it would on an appeal to the FTT against the relevant assessment or decision.

[192]As helpfully summarised by Judge Brown KC at paragraph 57 of Hall v HMRC

[2026] UKFTT 00124 (TC)

: The Court of Appeal [in Sintra Global] has unanimously, but not without some difficulty, determined that where the recipient of a personal liability notice or director’s liability notice seeks to challenge the underlying tax giving rise to such notices (in circumstances in which such tax has not already been judicially determined) the burden of proof lies with the taxpayer to demonstrate that the tax assessment is invalid/overstated.

[193]The effect of the Court of Appeal decision is that if a taxpayer wishes to contend in its defence that a liability to tax (which underlies a penalty) is not as HMRC have assessed, then the legal burden rests on that taxpayer to prove that the tax liability was wrong, in the same way as that taxpayer would have to if there was an appeal to the Tribunal against the relevant tax assessment.

[194]In discussing the burden on a taxpayer when appealing against an assessment, the Court of Appeal in Global Sintra set out a passage from the Court of Appeal decision in Khan (trading as Greyhound Dry Cleaners) v HMRC

[2006] EWCA Civ 89

[2006] STC 1167

: [69] There is no problem so far as concerns the appeal against the VAT assessment. The position on an appeal against a 'best of judgment' assessment is well-established. The burden lies on the taxpayer to establish the correct amount of tax due:

'The element of guess-work and the almost unavoidable inaccuracy in a properly made best of judgment assessment, as the cases have established, do not serve to displace the validity of the assessments, which are prima facie right and remain right until the taxpayer shows that they are wrong and also shows positively what corrections should be made in order to make the assessments right or more nearly right.' (See Bi-Flex Caribbean Ltd v The Board of Inland Revenue (1990) 63 TC 515 at 522-523 per Lord Lowry.) That was confirmed by this court, after a detailed review of the authorities, in Customs and Excise Comrs v Pegasus Birds Ltd [2004] EWCA Civ 1015, [2004] STC 1509. We also cautioned (see [2004] STC 1509 at [38]) against allowing such an appeal routinely to become an investigation of the bona fides or rationality of the 'best of judgment' assessment made by Customs: '

Evidence to the tribunal [38] … (i) The tribunal should remember that its primary task is to find the correct amount of tax, so far as possible on the material properly available to it, the burden resting on the taxpayer. In all but very exceptional cases, that should be the focus of the hearing, and the tribunal should not allow it to be diverted into an attack on the Commissioners' exercise of judgment at the time of the assessment …' It should be noted that this burden of proof does not change merely because allegations of fraud may be involved (see e.g. Brady (Inspector of Taxes) v Group Lotus Car Companies plc

[1987] STC 635

at 524,

[1987] 3 All ER 1050

at 1057–1058 per Mustill LJ).

[195]During HMRC’s final submissions, Mr Beg asked if it was possible to challenge the VAT assessments issued to Best Buy. Judge Bailey informed Mr Beg that it was too late for the Appellant to bring such an appeal. That response was given on the basis that, by the time of the November 2025 hearing, Best Buy was in liquidation and so it was the liquidators, not the Appellant, who controlled Best Buy and who decided whether to make an application to the Tribunal to make a late appeal. However, even if the Appellant had still controlled Best Buy at the time of the November 2025 hearing, its delay in appealing against the VAT assessments would then have been in excess of three years, significantly longer than the 30 days permitted by statute to make such an appeal.

Legislative framework

[196]Legislative framework The penalties and PLN were issued to Best Buy and the Appellant under Schedule 24 to the Finance Act 2007.

[197]Although Best Buy withdrew from these proceedings and the penalty issued to it became final, as the PLN issued to the Appellant is based upon the penalty that was issued to Best Buy, it is still necessary for HMRC to establish that they met the statutory requirements to impose the penalty upon Best Buy before they go on to demonstrate that they met the statutory requirements to make the Appellant liable to pay the penalty that had been issued. Therefore, we begin consideration of the legislative framework by looking at what HMRC must establish in respect of the penalty issued to Best Buy.

[198]The penalty issued to Best Buy was issued by HMRC under paragraph 1 of Schedule 24. As at 22 May 2022 (when the penalty was issued) paragraph 1 provided: 1 Error in taxpayer's document(1) A penalty is payable by a person (P) where– (a) P gives HMRC a document of a kind listed in the Table below, and (b) Conditions 1 and 2 are satisfied.

(2) Condition 1 is that the document contains an inaccuracy which amounts to, or leads to– (a) an understatement of a liability to tax, (b) a false or inflated statement of a loss, or (c) a false or inflated claim to repayment of tax.

(3) Condition 2 is that the inaccuracy was careless (within the meaning of paragraph 3) or deliberate on P's part.

(4) Where a document contains more than one inaccuracy, a penalty is payable for each inaccuracy.

[199]The burden is on HMRC to establish that Best Buy gave HMRC a document of a kind listed in the Table, and that Condition 1 and Condition 2 are satisfied.

The Table

[200]The Table The Table to which reference is made in sub-paragraph (1)(a) lists a number of different documents, including VAT returns.

[201]We are satisfied that Best Buy filed nine VAT returns in total, including the final three VAT returns that HMRC say contained inaccuracies.

Condition 1

[202]Condition 1 Condition 1 in paragraph (1) requires HMRC to show that there was an inaccuracy in those final three VAT returns which amounts to an understatement of a liability to tax.

[203]The last three returns filed on behalf of Best Buy were nil returns. As set out above, HMRC issued VAT assessments to Best Buy on the basis that Best Buy made metal sales of £12,790,032 between 1 November 2020 and 2 March 2021. The VAT assessed by HMRC was: - £699,200 in the VAT period ended 11/20, - £1,423,265 in the VAT period ended 02/21, and - £10,205 in Best Buy’s final VAT period.

[204]As there was no appeal against the VAT assessments, the assessments became final through effluxion of time.

[205]The metal trading on which the VAT assessments are based, is established for the purposes of this appeal by those VAT assessments.

[206]As the final three VAT returns filed by Best Buy did not include the metal trading, we are satisfied that Condition 1 in paragraph (1) has been demonstrated by HMRC, and that each of those three final VAT nil returns contained an inaccuracy which amounted to an understatement of a liability to tax.

Condition 2

[207]Condition 2 Condition 2 requires the inaccuracy to be careless or deliberate on the part of Best Buy. HMRC issued the penalty on the basis that Best Buy’s behaviour was deliberate.

[208]HMRC argue that the inaccuracies in the returns must have been deliberate inaccuracies because the volume of metal trading was so large that it was impossible for that trading to have been overlooked. The Appellant argued that she knew nothing about the metal trading, that these sales were nothing to do with her, and she did not act deliberately.

[209]On the basis that the metal trading by Best Buy is established by the finality of the assessments then, as a consequence, we accept HMRC’s submission that it is not possible for such a person to overlook sales of £12,790,032 in the approximately four month period between 1 November 2020 and 2 March 2021. The omission of that trading in the final three VAT returns is too large for it to have been as a result of lack of care.

[210]When Best Buy’s VAT returns were filed, with the VAT due from the metal trading sales omitted, then those omissions must have been either deliberate, as HMRC argue, or, as the Appellant argues, those omissions were not deliberate because the Appellant (as the director of Best Buy) had no knowledge of the metal trading undertaken in Best Buy’s name. Neither party argued that there was any other possible interpretation of events. As set out below, the onus is on the Appellant to prove, on the balance of probabilities that Best Buy was hijacked. Therefore, unless the Appellant can establish that Best Buy was hijacked, we accept that HMRC have demonstrated that Condition 2 is satisfied.

[211]It follows that, subject to the hijacking argument raised by the Appellant, we are satisfied that HMRC have demonstrated that the penalty raised on Best Buy met the requirements of paragraph 1 of Schedule 24.

The legislation relating to the PLN

[212]The legislation relating to the PLN The PLN was issued to the Appellant under paragraph 19 of Schedule 24. As at 22 May 2022, paragraph 19 of Schedule 24 provided: 19 Companies: officers' liability(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. (3A) In the application of sub-paragraph (1) to a limited liability partnership, “officer” means a member.

(4) In the application of sub-paragraph (1) in any other case “officer” means– (a) a director, (b) a manager, (c) a secretary, and (d) any other person managing or purporting to manage any of the company's affairs.

(5) Where HMRC have specified a portion of a penalty in a notice given to an officer under sub-paragraph (1)– (a) paragraph 11 applies to the specified portion as to a penalty, (b) the officer must pay the specified portion before the end of the period of 30 days beginning with the day on which the notice is given, (c) paragraph 13(2), (3) and (5) apply as if the notice were an assessment of a penalty, (d) a further notice may be given in respect of a portion of any additional amount assessed in a supplementary assessment in respect of the penalty under paragraph 13(6), (e) paragraphs 15(1) and (2), 16 and 17(1) to (3) and

(6) apply as if HMRC had decided that a penalty of the amount of the specified portion is payable by the officer, and (f) paragraph 21 applies as if the officer were liable to a penalty. (6) In this paragraph “company” means any body corporate or unincorporated association, but does not include a partnership, a local authority or a local authority association.

[213]We are satisfied that at all relevant times the Appellant was the sole director of Best Buy. The Appellant was the only person entitled to give instructions in respect of the filing of Best Buy’s VAT returns. We have found that the Appellant instructed AH to file Best Buy’s final VAT return, and that either the Appellant and/or Mr Beg filed the Appellant’s first eight VAT returns.

[214]Subject to the Appellant’s hijacking argument, we are satisfied that the deliberate inaccuracies in Best Buy’s final three VAT returns could only be attributable to the Appellant. As the Appellant was the sole director of Best Buy, we are satisfied that HMRC were entitled to specify that the Appellant should be liable to pay 100% of the penalty imposed upon Best Buy. There is no other director with whom liability for that penalty could be shared.

[215]Therefore, subject to the Appellant’s hijacking argument, HMRC have established that they were entitled to issue a PLN to the Appellant for the deliberate inaccuracies in Best Buy’s final three VAT returns as those inaccuracies are attributable to her.

[216]Therefore, unless the Appellant can establish, on the balance of probabilities, that Best Buy was hijacked, the PLN will be confirmed.

Was Best Buy hijacked?

[217]Was Best Buy hijacked? The onus is on the Appellant to establish that Best Buy was hijacked, and that she was not responsible for the trading in Best Buy’s name.

[218]A critical part of the Appellant’s hijacking defence is that she must explain a way in which MTL could have had a copy of her driving licence, other than a copy of that driving licence having been provided to MTL as part of MTL’s due diligence process.

[219]The Appellant’s primary case at the hearing was that her driving licence was used by KM fraudulently after the Appellant sent him a photograph of it on WhatsApp. However, we have found that the Appellant did not send KM a photograph of her driving licence.

[220]The Appellant also relied upon her report to the DVLA that her driving licence had been lost or stolen. The implication from this assertion by the Appellant is that another, unknown, person used that licence to take advantage of the fact that the Appellant was a company director, to trade in Best Buy’s name.

[221]This explanation from the Appellant requires:(1) another person to have found or taken the Appellant’s driving licence at some stage significantly prior to November 2020. Although the invoices we are concerned with are dated from 1 November 2020, the first invoice in this period bears the number 582. As we have found that Best Buy neither traded as a clothing retailer nor issued invoices to clothing trade customers, any invoices issued prior to invoice 582, issued on 1 November 2020, must have related to metal trading;

(2) for the Appellant not to have noticed her driving licence had been lost or stolen from significantly prior to November 2020 to about the beginning of April 2021, a period of (at least) five months;

(3) for the person that found or took the driving licence either to be intent on fraud themselves, or to have passed the Appellant’s driving licence onto a fraudster;

(4) for the fraudster to have an awareness of VAT supply fraud;

(5) for the fraudster to have identified the Appellant and Best Buy’s details from Companies House;

(6) for the fraudster to have identified Best Buy’s VAT registration number – the Appellant told the panel that JO had said that this was possible but that she had not been at the meeting with him where she told us he demonstrated this;

(7) for the fraudster to have engaged with metal traders such as MTL by purporting to be acting on behalf of Best Buy and showing the Appellant’s driving licence as proof of that instruction;

(8) for metal traders such as MTL to have been satisfied that they had conducted sufficient due diligence if another person presented the Appellant’s driving licence, or a copy of that licence, as evidence that they were genuinely acting on the Appellant’s instruction.

[222]In respect of (6), there is limited evidence about whether this is possible. The Appellant’s assertion that it is possible is supported by JO’s interaction with HMRC. In HMRC’s note of a telephone call from JO on 6 June 2022, JO specified the name of a website where he stated that this could be done, for HMRC to check. On the basis that HMRC did not, at that point, dispute JO’s assertions, we will assume that it is possible for a fraudster to have identified Best Buy’s VAT registration number.

[223]As a result, we accept that all of (1)-(8) are possible.

[224]However, in assessing whether the Appellant has established her defence of hijacking, we must consider not just whether it was possible that Best Buy was hijacked as the Appellant asserts, but whether it is more likely than not that Best Buy was hijacked.

[225]Weighing all the evidence that was before us, we are not satisfied that it is more likely than not that Best Buy was hijacked. We conclude that the weight of the evidence is not sufficient to establish the Appellant’s hijacking claim, and that there are also countermanding factors suggested by other evidence. In particular, in weighing the evidence, the following factors caused us to conclude that the Appellant’s arguments do not succeed in meeting the burden of proof upon her:(1) There was no credible reason for Best Buy to have been incorporated. The Beg family had traded in clothing for many years without a company, and once Best Buy was incorporated, we have found Mr Beg continued his sole trade as a clothing retailer;

(2) There was no credible reason for Best Buy to have registered for VAT. We have found Best Buy was not trading as a clothing retailer in 2019 and did not have a turnover of £100,000 on 12 March 2019 when it applied for VAT registration on the basis that it met the compulsory registration threshold. Even if the Appellant had mistakenly believed that Mr Beg’s turnover was Best Buy’s turnover, Mr Beg’s evidence was that the turnover of his clothing retail trade was £30,000, considerably below the registration threshold at that time of £85,000;

(3) The financial statements filed for Best Buy for the periods ended 28 February 2019 and 29 February 2020 are not credible, and the Appellant was unable to give an explanation for those financial statements;

(4) Once Best Buy had been registered for VAT on the basis that it met the compulsory registration threshold, there was no credible reason why Best Buy continued to remain registered for VAT. The Appellant did not offer any explanation why Best Buy, which only ever filed nil returns, did not voluntarily de-register from VAT after four nil returns;

(5) Even if the Appellant mistakenly believed that Best Buy was trading as a clothing retailer, there is no credible reason why the Appellant did not take steps to have Best Buy voluntarily de-register from VAT in August 2020 or December 2020 (the dates the Appellant gave for when Best Buy ceased to trade as a clothing retailer);

(6) The Appellant has demonstrated that she is capable of dishonest behaviour, by: (a) claiming CJRS payments until September 2021 despite telling the panel that Best Buy had ceased trading in December 2020 at the latest, and (b) telling the panel a version of events about the application for a BBL that could not be true.

[226]In light of all the facts we have found, we have concluded that the Appellant has not established, on the balance of probabilities, that Best Buy was hijacked by an unknown person (or persons) who engaged in metal trading in Best Buy’s name.

[227]As a result of rejecting the Appellant’s hijacking defence, we conclude that HMRC were entitled to issue a PLN to the Appellant for the deliberate inaccuracies in Best Buy’s final three VAT returns.

[228]The result is that the PLN issued to the Appellant is confirmed.

Conclusion

[229]Conclusion This appeal is dismissed for the reasons set out above.

Right to apply for permission to appeal

[230]Right to apply for permission to appeal 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: 18 August 2026