Tajinder Singh Pawar v The Commissioners for HMRC
[2023] UKFTT 81 (TC)
Laurence Onwufuju v The Commissioners for HMRC
3 January 2024
[2024] UKFTT 52 (TC)
First-tier Tribunal
A company didn't pay its VAT, and its director was personally fined. He appealed late, claiming he never got the fine notice. The judge didn't believe him and also said even if he had, the appeal would fail because the company couldn't prove it was owed money back in taxes. The director lost.
Key Facts
- •Laurence Onwufuju (appellant) appealed against a Personal Liability Notice (PLN) for £1,712,097.10 issued by HMRC for unpaid VAT owed by Webstar Dixon Limited (the company).
- •The appeal was 47 days late.
- •The company had submitted nil VAT returns despite issuing invoices totaling approximately £12,229,286 to Medpro Healthcare Ltd.
- •HMRC issued VAT assessments totaling £2,445,853 and a company penalty of £1,712,097.10 for deliberate behaviour.
- •The appellant was considered a shadow director and held personally liable for the company penalty.
- •The appellant claimed he did not receive the PLN until 27 June 2022, the day he appealed.
- •HMRC provided evidence suggesting the PLN was sent on 11/13 April 2022.
- •The appellant argued the company's appeal against the VAT assessments should affect the PLN.
- •The appellant failed to provide evidence of input tax to offset the output tax.
- •Medpro Healthcare Ltd. submitted an error correction notification for £3,288,938, affecting their VAT returns, but not necessarily the company's liability.
Legal Principles
When considering a late appeal, the tribunal should apply the three-stage process from *Martland v HMRC* [2018] UKUT 178 (TCC): (1) assess the delay; (2) determine the reason for the delay; (3) balance the merits of the reason against the prejudice to both parties.
Martland v HMRC [2018] UKUT 178 (TCC)
For a penalty for deliberate inaccuracy in a VAT return, HMRC must establish an intention to mislead.
HMRC v Tooth [2021] 1 WLR 2811
To strike out an appeal, the tribunal must consider whether there is a realistic, not fanciful, prospect of success. The claim must carry some degree of conviction and be more than merely arguable.
The First De Sales Limited Partnership and others v HMRC [2018] UKUT 396
Service of documents is deemed effected by properly addressing, pre-paying and posting a letter, unless the contrary is proved.
Section 7, Interpretation Act 1978
Outcomes
The appellant's application to make a late appeal against the PLN was rejected.
The tribunal found the 47-day delay was significant. The appellant failed to prove he didn't receive the PLN until 27 June 2022. The evidence supported HMRC's claim that the PLN was sent on 11/13 April 2022. Even if permission were granted, the appeal would have been struck out due to a lack of realistic prospect of success. The appellant failed to provide evidence of input tax to offset the output tax.
The appellant's substantive appeal against the PLN would have been struck out.
The appellant failed to provide evidence to support the company's claim for input tax credit. His arguments lacked substance, and any such claim was time-barred. The evidence showed deliberate behaviour justifying the penalty and PLN.