Coonley Trading Limited & Anor v The Commissioners for HMRC
[2023] UKFTT 452 (TC)
Paul Judd v The Commissioners for HMRC
3 January 2024
[2024] UKFTT 51 (TC)
First-tier Tribunal
A company director faced a tax penalty. He tried to argue the company's tax returns were correct, even though a court already ruled they were wrong. The judge said that was cheating, but let him argue other points about the penalty.
Key Facts
- •Appeal against a Personal Liability Notice (PLN) issued under paragraph 19, Schedule 24, Finance Act 2007.
- •PLN issued to a director (Appellant) for penalties assessed on Award Drinks Ltd (the company) for VAT inaccuracies.
- •Company's appeal against VAT assessments unsuccessful at FTT, UT, and Court of Appeal; company in liquidation.
- •Appellant applied to amend grounds of appeal to argue VAT returns were not inaccurate, and to challenge 'deliberate inaccuracy' and 'attribution' to the director.
- •HMRC objected, arguing abuse of process due to the outcome of the company litigation.
Legal Principles
Abuse of process: A court/tribunal can strike out a case with no reasonable prospect of success, including where it would be an abuse of process.
CNM Estates (Tolworth Tower) Ltd v Carvill-Biggs & anor [2023] EWCA Civ 480 at [69], Shiner v HMRC [2018] EWCA Civ 31, Trees v HMRC [2023] UKFTT 339 (TC) at [37]
Abuse of process is a broad, merits-based judgment considering public and private interests and all facts; key question is whether there's misuse/abuse of court/tribunal process.
Johnson v Gore Wood & Co [2002] 2 AC 1
Article 6 ECHR (right to a fair trial) doesn't override case management powers or limitations on appeals against tax penalties; abuse of process can still apply even if a penalty is considered a 'criminal charge'.
CF Booth v HMRC [2022] UKUT 217 (TCC)
Paragraph 19(5)(e), Schedule 24 FA 2007 provides a right of appeal against a PLN, unaffected by the outcome of the related company penalty appeal.
Bell v HMRC [2018] UKFTT 225 (TC), HMRC v Zaman [2022] UKUT 00252 (TCC), Andrew v HMRC [2016] UKFTT 0295 (TC)
Inaccuracy in a VAT return leading to understatement of liability is a condition for a penalty under paragraph 1, Schedule 24 FA 2007.
Paragraph 1, Schedule 24 FA 2007
Sufficient identification between the appellant and the company may justify 'fixing' the appellant with the outcome of the company litigation, even if he wasn't a party to it.
Gleeson v J Wippell [1977] 1WLR 510
HMRC generally bears the burden of proof to show a PLN was validly issued.
HMRC v Zaman [2022] UKUT 00252 (TCC)
Outcomes
Appellant's application to amend grounds of appeal to argue no VAT inaccuracy was refused.
This was deemed an abuse of process, given the outcome of the company litigation and the sufficient identification between the appellant and the company during that litigation.
Appellant's application to amend grounds of appeal to challenge 'deliberate inaccuracy' and 'attribution' was granted.
The FTT did not make findings on these issues, and the question of abuse of process did not arise. HMRC bears the burden of proof on these points.