Mohammed Zaman v The Commissioners for HMRC
[2023] UKFTT 404 (TC)
The Commissioners for HMRC v Mohammed Zaman
11 September 2024
[2024] UKUT 278 (TCC)
Upper Tribunal
HMRC challenged a tax tribunal's decision that a company didn't owe extra tax. The higher court agreed with the tribunal, saying the tribunal's decision, while debatable, wasn't unreasonable. The company won, even though some shady dealings were involved.
Key Facts
- •HMRC appealed an FTT decision in favor of Mr. Zaman regarding a Personal Liability Notice (PLN) for VAT.
- •The FTT decision followed a remittal from the UT due to an error of law in the original FTT decision.
- •The appeal was based on the argument that the FTT's decision was 'perverse' under Edwards v Bairstow grounds.
- •The case involved Zamco Ltd's importation of alcohol and whether VAT was correctly assessed.
- •The central dispute revolved around the location of the alcohol (UK or overseas) at the time of acquisition and sale by Zamco Ltd.
- •The FTT relied on documentation and Zamco Ltd's lack of UK premises to support its finding that the goods were located overseas.
- •The FTT acknowledged inconsistencies and potential illicit activity in the supply chain but found insufficient evidence to conclude that Zamco Ltd was involved in smuggling.
- •HMRC argued that the FTT wrongly weighed the evidence, particularly the documentation, in light of the illicit activity finding.
Legal Principles
Edwards v Bairstow 'perversity' test: A decision is perverse if no reasonable tribunal could have reached it on the evidence.
Edwards v Bairstow [1956] AC 14
Burden of proof for PLN: HMRC must prove the PLN's validity, while the trader must prove the VAT assessment is incorrect.
UT 2022 decision ([2022] UKUT 00252 (TCC))
Appellate interference with fact-finding: Appellate courts should avoid second-guessing fact-finding tribunals unless compelling reasons exist.
Case law implicitly discussed in section 33
Outcomes
Appeal dismissed.
The UT found that HMRC had not met the high threshold for overturning a fact-finding tribunal's decision. The UT held that the FTT's weighing of the evidence, including the documentation and the finding of illicit activity, was not an error of law, even though a different conclusion was possible.