Ezy Solutions Ltd (in liquidation) v The Commissioners for HMRC
[2024] UKFTT 299 (TC)
Horizon Contracts Limited (in liquidation) & Ors v The Commissioners for HMRC
19 April 2024
[2024] UKFTT 348 (TC)
First-tier Tribunal
A company is accused of VAT fraud involving many smaller companies. The court decided the tax authorities must show the company ALL the evidence against them, not just a small sample, so the company can properly defend itself. The court also said the company doesn't have to give the tax authorities extra information just because they are accused of dishonesty.
Key Facts
- •Appeal concerning denial of input VAT deduction of approximately £12.8 million.
- •Involvement of a large number (1520+) of mini-umbrella companies (MUCs) in an alleged fraudulent scheme.
- •HMRC's application to limit evidence disclosure to a sample of 50 MUCs.
- •Appellants' argument for full disclosure of all evidence related to all MUCs.
- •Issues regarding modified CPR style disclosure for both HMRC and Appellants.
- •HMRC's amended statement of case.
Legal Principles
Fundamental fairness and natural justice require an appellant to see all evidence relied upon by HMRC in constructing their case.
Ezy Solutions Limited and another v HMRC [2023] unreported; Judge Dean's decision.
In cases involving allegations of dishonesty, disclosure should include documents adverse to a party's case or supporting the opposing party's case.
HMRC v Citibank NA and another [2017] EWCA Civ 1416 and SOCA v Namli and another [2011] EWCA Civ 1411
The default position in civil proceedings is that the same disclosure regime applies to both parties.
HMRC v Malde [2021] EWHC 100 (Ch)
Heightened disclosure should not automatically apply to an appellant simply because HMRC alleges dishonesty; it would be contrary to the overriding objective.
Smart Price Midlands and another [2019] EWCA Civ 841
Article 6 of the European Convention on Human Rights concerning criminal charges.
Section 69C and 69D Value Added Tax Act 1994
Outcomes
HMRC's amended statement of case admitted.
No reason to refuse amendment at this stage.
HMRC's application to limit disclosure to a sample of evidence refused.
Fundamental fairness requires Appellants to see all evidence on which HMRC relies; sampling can be considered later.
HMRC's application for heightened disclosure from Appellants refused.
Heightened disclosure for Appellants not warranted simply because HMRC alleges dishonesty.
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