Budhdeo and Others

JurisdictionUK Non-devolved
CourtFirst Tier Tribunal (Tax Chamber)
Judgment Date17 April 2020
Neutral Citation[2020] UKFTT 193 (TC)
Date17 April 2020

[2020] UKFTT 193 (TC)

Judge Aleksander, Catherine Farquharson

Budhdeo & Ors

Income tax – Directions to recover PAYE income tax from individuals – Whether appellants were aware that employer had wilfully failed to deduct PAYE – Whether 20 year extended time limit for assessments applied – Regulation 72, Income Tax (PAYE) Regulations 2003.

DECISION
Introduction

[1] These three appeals by Mr Budhdeo, Mr Hundal, and Mr Mathew were directed to be heard together by the Tribunal. The three appellants were all directors of Intecare Homecare Limited (renamed IH Realisations 2008 Limited on 22 December 2008) (“IHL”).

[2] The appeals relating to Mr Budhdeo and Mr Hundal relate to assessments under s29, Taxes Management Act 1970 (“TMA”) following directions under regulation 72, Income Tax (PAYE) Regulations 2003 (“the Regulations”) to recover tax that IHL, according to HMRC, should have deducted from payments of employment income made to these Appellants in 2008/09.

[3] The appeal relating to Mr Matthew relates to a closure notice issued under s28A TMA, following a corresponding direction under the PAYE Regulations to recover unpaid PAYE.

[4] In addition, the appeals extend to late payment surcharges levied under s59C, TMA on the basis that the tax was not paid, nor any appeal filed, within 28 days of the due date for payment of the tax arising on the assessment or closure notice.

[5] The amounts of tax subject to these appeals are as follows:

Date

Legislation

Appellant

Amount

28 Feb 2017

Section 29 TMA & Regulation 72 PAYE Regulations

Hundal

£120,000

28 Feb 2017

Section 29 TMA & Regulation 72 PAYE Regulations

Budhdeo

£120,000

28 Feb 2017

Section 28A TMA & Regulation 72 PAYE Regulation

Matthew

£36,000

Procedural background

[6] There is a long and convoluted procedural background to this hearing. HMRC had commenced a COP9 enquiry against Mr Budhdeo in 2013. That meant that HMRC had told him that they suspected him of tax fraud but would agree not to prosecute if he agreed to full disclosure. He was warned if he did not, HMRC might carry out a criminal investigation into the suspected tax fraud. Mr Budhdeo did not agree to full disclosure and denied any wrongdoing.

[7] Mr Budhdeo, Mr Hundal, and Mr Mathew and a number of other companies, not including IHL, had brought appeals in this Tribunal against the issue of information notices to them and (as regards Mr Budhdeo, Mr Hundal and the companies) against penalties imposed for their non-compliance with the notices. These appeals were reported as Gold Nuts Ltd [2016] TC 04875, Gold Nuts Ltd [2017] TC 05602, Gold Nuts Ltd [2017] TC 05828, Hundal [2018] TC 06647 and Mathew [2015] TC 04342.

[8] In July 2018, following a case management hearing, the Tribunal gave directions for the future conduct of this appeal, including that the parties would exchange lists of documents by 28 September 2018, and would serve witness statements by no later than 31 October 2018.

[9] When chased by the Tribunal for his list of documents, Mr Budhdeo applied for the appeal to be stayed on the basis (a) he was a party to a judicial review proceedings against HMRC and (b) he was subject to a COP9 enquiry which amounted to a criminal charge and engaged his right not to self-incriminate. HMRC objected to the application and the application was set down for hearing. That application was refused by the Tribunal following a hearing on 12 December 2018 ([2019] TC 07063 released on 29 March 2019). The reasons given by Judge Mosedale in her decision speak for themselves, but we note that she held that, although Mr Budhdeo could not be compelled to give oral evidence in this appeal, it was far from obvious that doing so would prejudice Mr Budhdeo's defence in any criminal proceedings – and indeed Mr Budhdeo was unable to identify any specific prejudice to him if he gave oral evidence in civil proceedings, but was later prosecuted. The deadline for the service of lists of documents and witness statements had expired, but as Mr Budhdeo informed the Tribunal that he did not wish to serve a witness statement, the Tribunal decided that there was no need to make directions to now allow him to do so. However, he was warned that it may harm his case if he did not give evidence, and that unless he served a written witness statement well in advance of the hearing and was given permission to rely on it, the hearing judge may not permit him to give any oral evidence at the hearing and may refuse to adjourn the hearing to allow him to serve a witness statement. The Tribunal gave directions that the parties provide their listing information (including dates to avoid) by no later than 13 April 2019. No listing information was ever provided on behalf of Mr Budhdeo.

[10] Mr Budhdeo sought permission to appeal against that decision, which was refused by this Tribunal, and then refused on the papers by the Upper Tribunal.

[11] On 4 June 2019, this appeal was set down for hearing on 24-25 September 2019.

[12] On 6 June 2019, Mr Budhdeo made an application to postpone the hearing date on the grounds that he was not available, and on 10 June 2019, HMRC made a similar application on different grounds. Both applications were refused.

[13] On 29 July 2019, HMRC renewed their application to postpone the hearing date, which was refused.

[14] On 1 August 2019, HMRC wrote to Mr Budhdeo closing their COP9 investigation and confirming that they would not proceed with any criminal charges. We were told that this letter was only received by Mr Budhdeo on 6 August.

[15] Mr Budhdeo applied for his application for permission to appeal be considered at an oral hearing before the Upper Tribunal, and on 15 August 2019, he was informed that this hearing was listed for 15 October 2019.

[16] On 16 August 2019, Mr Budhdeo renewed his application to postpone the hearing date on the grounds that the permission to appeal against the 29 March 2019 decision was set down for an oral hearing before the Upper Tribunal on 15 October, and on the grounds that he was on leave on the FTT hearing dates. That application was refused.

[17] On 22 August 2019, Mr Hundal applied for the hearing to be postponed, and on 27 August 2019, HMRC renewed their application to postpone the hearing.

[18] On 4 September 2019, the Tribunal issued written reasons explaining why the further applications to postpone the hearing were again refused: Mr Budhdeo had not given good grounds for the postponement – without good reason he had not provided the Tribunal with dates to avoid, and did not explain why he was unavailable before any of the prior postponement applications. As regards the Upper Tribunal hearing, the Tribunal noted that his application had been refused on the papers, and that Mr Budhdeo had renewed his application orally. Although there was a theoretical risk that the Upper Tribunal could grant permission following the oral hearing, the Tribunal held that it was unlikely that permission would be given (or even if permission was given, that the appeal would be decided in his favour), a view reinforced by the Upper Tribunal's refusal to give leave on the papers. The Tribunal noted that if it became the Tribunal's practice to postpone hearings in circumstances where a party appealed against a case management decision to refuse a postponement, then the effect would be to make Tribunal decisions to refuse postponements worthless. The Tribunal directed that none of the parties may renew their application at the hearing on the same grounds on which it had already been refused.

[19] At the opening of the hearing before us, Mr Livingstone, on behalf of Mr Budhdeo, renewed the application to postpone the hearing, this time on the grounds that Mr Budhdeo wanted to give evidence (and file a witness statement), but until now had been unable to do so pending the resolution of the COP9 enquiry. We refused the application to postpone the hearing. There was no good reason advanced on behalf of Mr Budhdeo why he could not have provided a witness statement in accordance with the directions previously given, and there was no good reason given why the hearing should now be postponed to allow him to now prepare one.

[20] We noted that:

  • as stated in the Tribunal's decision of 29 March, providing a witness statement for the purposes of this appeal would not have prejudiced Mr Budhdeo's defence, even if a criminal trial had arisen from the COP9 enquiry;
  • Mr Budhdeo was aware that HMRC had concluded their COP9 enquiry, at the very latest, on 6 August – yet the application he made on 16 August to stay these proceedings did not mention that now wanted to file a witness statement and that he needed time to prepare it; and
  • he was warned in the 29 March decision of the risk that failure to supply a written witness statement well in advance of the hearing may result in him not being able to give oral evidence, and that the hearing judge might refuse to allow an adjournment to allow him to serve a witness statement.

[21] As Mr Budhdeo had not provided a witness statement in accordance with the Tribunal's directions, we did not permit Mr Budhdeo to give oral evidence.

Representatives and evidence

[22] Mr Livingstone represented both Mr Budhdeo and Mr Mathew. Mr Hundal appeared in person. Mr Foxwell represented HMRC.

[23] Mr Hundal, Mr Mathew, and Mr Goater provided witness statements, and each gave oral evidence. In addition, bundles of documentary evidence were produced (Mr Goater is an officer of HMRC and was responsible for issue of the assessments and closure notice).

Background facts
The appellants and others

[24] IHL was founded by Mr Budhdeo and Mr Hundal in 2002. At all times they were both employees, directors, and shareholders of IHL. According to the administrators' final report, at the time the company went into administration, IHL had 180 ordinary shares in issue, of which Mr Budhdeo and Mr Hundal each owned 90 shares.

...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT