Colm Brendan Malone v The Commissioners for HMRC
[2023] UKFTT 98 (TC)
Apollinaire Ltd & Anor v The Commissioners for HMRC
21 November 2022
[2022] UKFTT 432 (TC)
First-tier Tribunal
A businessman's companies were assessed for unpaid VAT. He claimed to have sold one company, but the Tribunal found he still controlled both businesses. Because he did things deliberately to avoid tax, he had to pay personally.
Key Facts
- •Apollinaire Ltd appealed VAT assessments totaling £122,665.85, and Zakir Hussain Hashmi appealed a Personal Liability Notice (PLN) for £65,801.50.
- •The assessments stemmed from inaccuracies in Apollinaire's VAT returns, involving over-declared input tax and under-declared output tax related to a potential Transfer of a Going Concern (TOGC).
- •Hashmi claimed he sold his business, Snow Whyte Ltd, to Mr. Singh, but the purchase price was never paid. Snow subsequently sold stock to Apollinaire.
- •HMRC argued Hashmi controlled both Snow and Apollinaire, and the stock transfer was a TOGC despite the alleged sale to Singh.
- •The Tribunal examined significant inconsistencies in evidence provided by Hashmi, his accountant (Javid), and a subsequent representative (Wood).
- •Evidence included Google Street View images showing 'Benny Hamish' signage at Apollinaire's premises (Dunlop) well before the claimed opening date.
- •Hashmi's history included several companies with tax debts and non-filed returns, raising concerns about potential insolvency.
- •The Tribunal considered whether the VAT inaccuracies were deliberate and attributable to Hashmi's actions as the sole director.
Legal Principles
Definition of a taxable person under VATA
Value Added Tax Act 1994
Conditions for a Transfer of a Going Concern (TOGC) to be treated as neither a supply of goods nor services
Value Added Tax (Special Provisions) Order 1995
Personal liability of company officers for deliberate inaccuracies in tax returns
Finance Act 2007, Schedule 24, paragraph 19
Definition of 'deliberate inaccuracy' in tax returns
Clynes v Revenue and Customs [2016] UKFTT 369 (TC)
Conditions for refusing to permit a VAT scheme
Value Added Tax Regulations 1995
Outcomes
Appeals dismissed
The Tribunal found a TOGC existed between Snow and Apollinaire, with Hashmi as the controlling mind. Inaccuracies in VAT returns were deemed deliberate and attributable to Hashmi.
VAT assessments upheld
Apollinaire traded from incorporation; the retail scheme was inappropriately used; input tax was incorrectly claimed.
Personal Liability Notice (PLN) upheld
Hashmi's actions were deliberate, given his history of dissolving companies to avoid tax and inconsistencies in his statements.