Byers
| Jurisdiction | UK Non-devolved |
| Judgment Date | 13 May 2019 |
| Neutral Citation | [2019] UKFTT 310 (TC) |
| Date | 13 May 2019 |
| Court | First-tier Tribunal (Tax Chamber) |
[2019] UKFTT 310 (TC)
Judge Heidi Poon, Mr Leslie Brown
Mr Hammad Baig, Counsel instructed by Vincent Curley & Co Ltd, appeared for the appellant
Ms Joanna Vicary, Counsel instructed by Solicitor's Office and Legal Services of HMRC, appeared for the respondents
Value added tax – Penalty for under-declaration – Whether delays in proceedings have interfered with Appellant's art. 6 Convention rights – Whether the Appellant was dishonest within the meaning of VATA 1994,s. 61 – Credibility issue of witness evidence – The test of dishonesty for civil evasion penalty – Ivey v Genting Casinos (UK) Ltd (t/a Crockfords) [2017] UKSC 67; [2018] AC 391 – Whether apportionment of penalty due – Penalty liability not discrete – Appeal dismissed.
[1] Mr Karl Byers, appeals against a VAT Civil Evasion Penalty Notice by the respondents (“HMRC”) pursuant to s 61 of the Value Added Tax Act (“VATA”).
[2] The penalty in the sum of £46,876.20 in relation to the period from 1 June 2004 to 31 January 2007 is imposed on Mr Byers on the basis that an under-declaration of VAT by BSL Auto Services (South) Limited (“BSL (South)” otherwise “BSL”), a company of which Mr Byers was a director, was attributable to his dishonest conduct.
[3] The disputed decision is HMRC's assessment notice dated 6 October 2008, in which HMRC held that BSL's conduct which resulted in the under-declaration of VAT was in whole or in part attributable to Mr Byers' dishonesty.
[4] The appeal does not raise any challenge to the quantum of the underlying VAT assessment of £78,141.87, which gave rise to the penalty, nor to the percentage of mitigation granted by HMRC of 40%.
[5] For the purposes of this appeal, the provisions under s 61 VATA is to be read in conjunction with s 60 VATA. Section 61 provides that a penalty involving dishonesty which has been assessed on a corporate body under s 60 VATA may, in certain circumstances, be recovered from an officer of that corporate body as if that officer were personally liable. The relevant parts of ss 60 and 61 are as follows:
(1) In any case where –
- for the purpose of evading VAT, a person does any act or omit to take any action, and
- his conduct involves dishonesty (whether or not it is such as to give rise to criminal liability),
he shall be liable, subject to subsection (6) below, to a penalty equal to the amount of VAT evaded or, as the case may be, sought to be evaded, by his conduct.
(2) The reference in subsection (1)(a) above to evading VAT includes a reference to obtaining any of the following sums –
- a refund under any regulations made by virtue of section 13(5);
- a VAT credit;
- a refund under section 35, 36 or 40 of this Act or section 22 of the 1983 Act; and
- a repayment under section 39,
in circumstances where the person concerned is not entitled to that sum.
[…]
(1) Where it appears to the Commissioners –
- that a body corporate is liable to a penalty under section 60, and
- that the conduct giving rise to that penalty is, in whole or in part, attributable to the dishonesty of a person who is, or at the material time was, a director or managing officer of the body corporate (a named officer),
the Commissioners may serve a notice under this section on the body corporate and the named officer.
(2) A notice under this section shall state –
- the amount of the penalty referred to in subsection (1)(a) above the basic penalty), and
- that the Commissioners propose, in accordance with this section, to recover from the named officer such portion (which may be the whole) of the basic penalty as is specified in the notice.
(3) Where a notice is served under this section, the portion of the basic penalty specified in the notice shall be recoverable from the named officer as if he were personally liable under section 60 to a penalty which corresponds to that portion; and the amount of that penalty may be assessed and notified to him accordingly under section 76.
[…]
(5) No appeal shall lie against a notice under this section as such but –
- where a body corporate is assessed as mentioned in subsection (4)(a) above, the body corporate may appeal against the Commissioners' decision as to its liability to a penalty and against the amount of the basic penalty as if it were specified in the assessment; and
- where an assessment is made on a named officer by virtue of subsection (3) above, the named officer may appeal against the Commissioners' decision that the conduct of the body corporate referred to in subsection (1)(b) above is, in whole or part, attributable to his dishonesty and against their decision as to the portion of the penalty which the Commissioners propose to recover from him.
but (subject to that section) where further such evidence comes to the Commissioners' knowledge after the making of an assessment under subsection (1), … above, another assessment may be made under that subsection, in addition to any earlier assessment.
(6) [definition of “managing officer”] …
[6] Section 70(1) of VATA provides that HMRC (or on appeal, a Tribunal) may reduce the penalty to such amount (including nil) as they think proper.
[7] The authorities referred to in this Decision or in parties' submissions are listed in the alphabetical order of their short case names in the Annex to this Decision.
[8] The Notice of Appeal was received by the then VAT and Duties Tribunal on 17 October 2008. The appeal has had a protracted history before it came to be heard in May 2018, almost a decade after the first lodgement of the appeal.
[9] The chronology of the proceedings is summarised as follows, with the relevant dates in brackets (date/month):
- In 2008 – HMRC applied for an extension of time to serve their Statement of Case to allow time for internal review to be carried out (24/10), and (10/12).
- In 2009 – HMRC applied for an extension of time to serve Statement of Case (16/01); service of Statement and List of Documents (23/2) and witness evidence of Officer Barry Rush (23/4).
- In 2009 – appellant served a response to the Statement of Case (Defence) (28/5); appellant applied for a direction to stay the proceedings in order to facilitate investigation by HMRC of those matters raised in appellant's statement of defence (25/6); HMRC consented.
- In 2009 – Tribunal directed a pre-hearing review to be listed (1/7); a pre-trial review hearing was listed for 11 November 2009; Tribunal directions issued for HMRC to disclose documents relating to meeting of 11 April 2007, copies of all VAT returns, and Sage business records held (11/11).
- In 2010 – appellant served List of Documents (4/1); HMRC served witness statements of Alison Parkin and Roland Tilney (26/2).
- In 2011 – hearing listed (for 3 to 5 May 2011); appellant applied to vacate listed hearing on the ground of ill health (5/4); HMRC did not oppose. The case was stood over behind Sofed Miah (MAN/2002/0378).
- In 2012 – Stay continued.
- In 2013 – appellant made three applications for standover: (i) first time to allow representative (Mr Curley) time to read papers (5/4); (ii) second time asserting issue with legal aid funding (18/6); (iii) third time (7/10). HMRC raised no objections against any of the three applications.
- In 2014 – listing for preliminary hearing (15/4); appellant not available and hearing vacated; re-listing for August; appellant applied to vacate the listing on ground of no legal aid (18/6); hearing vacated.
- In 2015 – letter from Tribunal regarding non-compliance with directions (29/6); on three separate occasions appellant applied to extend time for compliance (6/7), (8/10), and (21/12); HMRC raised no objection.
- In 2016 – the following procedural steps took place:Appellant applied for the fourth time to extend time for compliance with directions (7/3); HMRC did not object.HMRC applied to extend time (30/3); appellant did not object.Appellant's fifth application to extend time (12/5) refused by the Tribunal.HMRC applied for directions (10/6).Directions from Tribunal listing to final hearing (15/8).HMRC served a second statement of Roland Tilney (18/8).Appellant applied to extend dates for compliance (14/9); HMRC did not object.Appellant applied (14/10) for stay until 30 November 2016.Appellant applied (30/11) for stay until 31 January 2017.
- In 2017 – Interim application hearing attended by Mr Baig and Ms Vicary before Judge Cannan (13/1); directions to list appeal for final hearing (19/1).
[10] By notice dated 30 November 2016, Mr Byers' representative applied for “the appeal to be stood over and for all time limits to be extended up to and including 31st January 2017”. The application was premised upon the need for “time to instruct a medical expert and take advice from Counsel”.
[11] HMRC opposed the application and gave their grounds as follows:
- The notice of appeal was served on 16 October 2008.
- HMRC served their Statement of Case and Lists of Documents on 23 February 2009 and witness evidence from Barry Rush (23/4/2009), Alison Parkin (26/02/2010) and Roland Tilney (16/02/2010 and 18/08/2016).
- The appellant served a response to the Statement of Case (28/05/2009) and their List of Documents (04/01/2010).
- Since 2011, the appellant had repeatedly sought to frustrate the proceedings through applications to vacate hearings and to stay, or otherwise adjourn proceedings generally.
- The present application falls to be considered against the background of delay and obfuscation caused by the appellant to date.
- In addition, the following facts are material to the Tribunal's consideration:The appellant is, and has been throughout, professionally represented in these proceedings.The application asserts that time is needed to take advice from Counsel. No reason is provided as to why such advice, if required, has not...
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