Key Facts
- •IPS Progression Limited (Respondent) failed to comply with s 308(3) of the Finance Act 2004 (FA 2004) regarding disclosure of tax avoidance schemes (DOTAS).
- •Respondent provided PAYE payroll services with a structure involving employment, loan, and bonus agreements, resulting in untaxed 'ILO bonus' payments.
- •HMRC alleged the Respondent was a 'promoter' of notifiable arrangements and sought a penalty under s 98C of the Taxes Management Act 1970 (TMA).
- •The Respondent argued the 'ILO bonus' was a loan, not taxable income, and that they had a reasonable excuse for the late disclosure.
- •The Respondent's post-hearing application to introduce new evidence regarding the time limit for HMRC's penalty application (s 103(4) TMA) was rejected.
Legal Principles
Disclosure of Tax Avoidance Schemes (DOTAS) - Promoter's obligation to provide prescribed information under s 308(3) FA 2004.
Finance Act 2004
Penalty for failure to comply with DOTAS disclosure obligations under s 98C TMA.
Taxes Management Act 1970
Determination of a reasonable excuse for non-compliance with a statutory obligation.
Taxes Management Act 1970
Time limits for commencing proceedings for penalties (s 103(4) TMA) and the admissibility of new evidence post-hearing.
Taxes Management Act 1970
Assessment of penalties considering deterrence, fees received, and proportionality.
Taxes Management Act 1970
The 'Ladd v Marshall' test for admissibility of new evidence on appeal.
Ladd v Marshall [1954] 1 WLR 1489
The 'Denton' test for considering applications made after the deadline for presenting evidence.
Denton v TH White Ltd [2014] EWCA Civ 906
Outcomes
IPS Progression Limited is liable to a penalty of £900,000 under s 98C(1)(a)(i) and (2)(a) TMA.
The Respondent's arrangements constituted notifiable arrangements under DOTAS, they were a promoter, and there was no reasonable excuse for the delay in disclosure.
Respondent's post-hearing application to introduce new evidence was refused.
Significant delay in presenting the evidence, unsatisfactory explanation for the delay, and the evidence unlikely to significantly impact the outcome.