Michael Burne v The Commissioners for HMRC
[2024] UKFTT 945 (TC)
Daniel Witton v The Commissioners for HMRC
22 May 2024
[2024] UKFTT 489 (TC)
First-tier Tribunal
Someone didn't pay their taxes, and the tax man (HMRC) tried to get the money from the employee instead of the employer. The court had to decide if the tax man could use new evidence and whether they played fair. The court let the tax man use the new evidence, but said the employee should be partially compensated for the unfair actions of the tax man.
Key Facts
- •Appeal by Daniel Witton against HMRC's decision requiring him to pay £424,930.50 in income tax and NICs.
- •HMRC's power to recover unpaid PAYE liabilities from employees when employers wilfully fail to deduct.
- •Various applications before the Tribunal: HMRC's application to admit additional evidence, Witton's application to bar HMRC, and a costs application.
- •Disputes over burden of proof regarding whether Direct Sharedeal Limited (DS Limited) wilfully failed to deduct income tax and NICs.
- •Delay in HMRC's application to admit additional evidence.
Legal Principles
Burden of proof on HMRC to establish wilful failure by employer to deduct PAYE and NICs.
HMRC v Stephen West [2018] UKUT 0100 (TC)
Test for barring a party from proceedings: realistic prospect of success, no mini-trial.
The First De Sales Ltd Partnership and others v HMRC [2018] UKUT 396 (TCC)
Test for admitting late evidence: seriousness of delay, reason for delay, and overall circumstances.
Martland v HMRC [2018] UKUT 178 (TCC)
Tribunal's power to admit evidence inadmissible in a civil trial.
FTT Rules, Rule 15(3)
Test for awarding costs: unreasonable conduct in the proceedings.
Market & Opinion Research International Ltd v HMRC [2015] UKUT 12 (TCC)
Outcomes
HMRC's application to amend the list of documents allowed.
No serious default, Tribunal's flexibility, relevance of documents.
HMRC's application to admit a second witness statement allowed.
Balancing exercise considering delay, reason for delay, and prejudice to both parties.
Witton's application to bar HMRC refused.
Admission of additional evidence remediates any deficiency; applying the First De Sales test.
Witton's costs application partially allowed.
HMRC's unreasonable conduct in arguing burden of proof and failing to address Martland principles.