(1) Mark Mitchell and (2) Paul Bell v The Commissioners for HM Revenue and Customs [2021] UKUT 0250 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Judge Jonathan Richards,Judge Jonathan Cannan |
| Neutral Citation | [2021] UKUT 0250 (TCC) |
| Subject Matter | 8 October 2021 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 11 October 2021 |
[2021] UKUT 0250 (TCC)
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
Appeal number: UT/2020/0030
UT/2020/0037
BETWEEN
(1) MARK MITCHELL
(2) PAUL BELL
Appellants
-and-
THE COMMISSIONERS FOR
HER MAJESTY’S REVENUE AND CUSTOMS
Respondents
TRIBUNAL:
JUDGE JONATHAN RICHARDS
JUDGE JONATHAN CANNAN
Sitting in public by way of remote video hearing treated as taking place at The Royal
Courts of Justice, Strand, London on 20 and 21 July 2021
Julian Hickey, counsel, instructed by Levy & Levy Solicitors for the First Appellant
Barrie Akin, counsel, instructed by Hill Dickinson Solicitors for the Second Appellant
Jenny Goldring and Aparna Rao, counsel, instructed by the General Counsel and
Solicitor to HM Revenue and Customs, for the Respondents
PROCEDURE – disclosure of documents by HMRC relating to the tax affairs of one appellant
to an appellant in a related appeal – s18 Revenue and Customs Act 2005 – relevance of the
documents – case management decision of the FTT – appeals dismissed
1
DECISION
INTRODUCTION
1. The first appellant (“Mr Mitchell”) and the second appellant (“Mr Bell”) separately
appeal against a decision of the FTT released on 30 October 2019 (“the Decision”). Mr Mitchell
and Mr Bell have separate appeals before the FTT which are due to be heard together by the
same tribunal. The FTT had two applications before it, which it dealt with in the course of a
case management hearing:
(1) an application by HMRC dated 21 December 2018 that HMRC should be permitted
to disclose to Mr Bell certain documents relating to the tax affairs of Mr Mitchell and
companies connected with him;
(2) an application by Mr Mitchell dated 18 January 2019 that the same documents
should be excluded from evidence at the hearing of the two appeals.
2. Mr Mitchell and Mr Bell are both shareholders in two companies, Universal Payroll
Services Ltd (“Payroll”) and Universal Project Services Ltd (“Project” and together with
Payroll the “Universal C ompanies”). HMRC considered that there were inaccuracies in the
Universal Companies’ VAT returns submitted between 2010 and 2014 involving claims for
input tax credit that was not due. HMRC assessed the Universal Companies to recover that
input tax, and also assessed them to penalties determined on the basis that the inaccuracies
were deliberate. The Universal Companies subsequently went into liquidation and have not
appealed the assessments or the penalties.
3. HMRC also used their power under paragraph 19(1) of Schedule 24 to the Finance Act
2007 to give personal liability notices (“PLNs”) to Mr Mitchell and Mr Bell, making each liable
to 50% of the penalties charged on the companies. Paragraph 19(1) provides as follows:
Where a penalty under paragraph 1 is payable by a company for a deliberate
inaccuracy which was attributable to an officer of the company, the officer is
liable to pay such portion of the penalty (which may be 100%) as HMRC may
specify by written notice to the officer.
4. An “officer” for these purposes is defined by paragraph 19(3) as referring to a director,
which includes by virtue of ss250 and 251 Companies Act 2006, a de facto director and a
shadow director.
5. Thus paragraph 19(1) imposes two preconditions to the imposition of a PLN: first a PLN
can only be imposed on an “officer” of the company concerned; second, the deliberate
inaccuracy that led to the company being charged a penalty must be “attributable to” that
officer. The PLNs relevant in these proceedings were given on the basis that both appellants
were de facto or shadow directors of both Payroll and Project, and so were “officers” and that
each company’s deliberate inaccuracy was “attributable to” both appellants. The liability of
each appellant is approximately £6m. Both appellants deny that they were de facto or shadow
directors.
6. On 9 May 2018, the FTT directed that the appellants’ appeals should proceed together
and be heard together. It also directed HMRC to serve a combined statement of case which
they did on 9 July 2018. In that statement of case, HMRC referred to investigations under Code
of Practice 9 (“COP 9”) that they had made into the tax position both of Mr Mitchell and of
companies that he controlled and to information that Mr Mitchell provided to them in the course
of those investigations. Mr Bell wrote to HMRC to request early disclosure of some of the
documents that HMRC had referred to in their statement of case, including some of the material
relating to HMRC’s COP 9 investigation. On making enquiries with Mr Mitchell, HMRC
ascertained that he objected to disclosure of some of these documents.
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