Hull City AFC (Tigers) Limited v The Commissioners for Her Majesty's Revenue & Customs, TC 06065
| Jurisdiction | UK Non-devolved |
| Judge | Malcolm GAMMIE QC |
| Judgment Date | 14 August 2017 |
| Neutral Citation | [2017] UKFTT 0629 (TC) |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
| Appellant | Hull City AFC (Tigers) Limited |
| Reference | TC 06065 |
| Court | First-tier Tribunal (Tax Chamber) |
[2017] UKFTT 0629 (TC)
TC06065
Appeal number: TC/2015/02945
PROCEDURE – application to vary directions – payments made to third
party in respect of footballer’s image rights – HMRC alleging that image
rights agreements uncommercial and payments excessive – payments
alleged to be footballer’s earnings – whether HMRC effectively alleging
sham – burden of proof in relation to an allegation of sham – whether
HMRC should be directed to serve their witness evidence and skeleton
argument first – whether HMRC should prepare hearing bundles
FIRST-TIER TRIBUNAL
TAX CHAMBER
HULL CITY AFC (TIGERS) LIMITED Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S Respondents
REVENUE & CUSTOMS
TRIBUNAL:
JUDGE MALCOLM GAMMIE CBE QC
Sitting in public at Alexandra House, Manchester on 15 March 2017
Keith Gordon (counsel) instructed by Jacksons for the Appellant
Akash Nawbatt QC (counsel) instructed by the General Counsel and Solicitor to
HM Revenue and Customs, for the Appellants
© CROWN COPYRIGHT 2017
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Contents
Introduction............................................................................................................... 3
The Appellant’s submissions .....................................................................................9 5 HMRC’s submissions.............................................................................................. 12
The Appellant’s reply.............................................................................................. 13
Hilden Park............................................................................................................. 14
Discussion ............................................................................................................... 15
The statutory basis for the Directions and Decisions ............................................ 16 10 The significance of an assessment “standing good”..............................................16
The obligation on HMRC to validate the assessment............................................ 17
The burden of satisfying the statutory conditions for raising an assessment.......... 20
Application of the above principles to the Appellant’s case.................................. 23
The power to bar HMRC from continued participation in proceedings................. 24 15 Occasions on which the burden of proof is on or shifts to HMRC ........................ 26
HMRC’s obligation to state its case..................................................................... 31
Sham and abuse................................................................................................... 35
The Hilden Park Decisions................................................................................... 44
Conclusions on the burden of proof for sham and abuse....................................... 47 20 What do HMRC allege in their statement of case?............................................... 51
The appropriate directions in the Appellant’s case ............................................... 57
Conclusion .............................................................................................................. 59
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DECISION
Introduction
1. This is an application by Hull City AFC (Tigers) Limited (“the Appellant”) to 5 vary the directions that have been made in its appeal. The current directions are those
previously agreed between the parties and endorsed by the Tribunal on 20 September
2016. I shall refer to the Respondents as “HMRC”. At the hearing, the Appellant
was represented by Mr Keith Gordon and HMRC by Mr Akash Nawbatt QC.
2. The appeal arises from three Directions under Regulation 80 of the Income Tax 10 (Pay As You Earn) Regulations 2003 and three Decisions under section 8 of the
Social Security Contributions (Transfer of Functions) Act 1999 in respect of the tax
years 2008/2009, 2009/2010 and 2010/2011. The Directions and Decisions were
made in respect of payments made by the Appellant to a British Virgin Islands’
service company (Joniere Limited) in respect of the image rights of Geovanni 15 Deiberson Mauricio Gómez (who evidently is known simply as Geovanni but who
will be referred to in this decision as “Mr Gómez”). I understand that Mr Gómez is
an attacking midfield player who played once for Brazil in 2001 and was contracted to
the Appellant between 2008 and 2010 after playing in previous years for Cruzeiro,
Barcelona, Benfica and Manchester City. I believe that he made 60 appearances for 20 the Appellant and scored 11 goals.
3. The agreements with which the appeal is concerned are two Premier League
contracts between the Appellant and Mr Gómez of 7 July 2008 and 23 September
2009 and two contracts between the Appellant and Joniere Ltd of 3 November 2008
and 24 March 2010. The latter contracts are those in respect of Mr Gómez’s image 25 rights (evidently granting the Appellant a licence to exploit for commercial purposes
his name, image, signature and other characteristics). These contracts were not
produced for the purposes of the hearing although certain terms in the agreements are
referred to or reproduced in HMRC’s statement of case.
4. The Appellant appealed the Directions and Decisions and, following a review 30 upholding them on 1 April 2015, the Appellant notified its appeal to the Tribunal on
14 April 2015. The appeal was allocated to the standard category on 12 May 2015.
HMRC served their statement of case on 9 July 2015 and at the same time they
submitted to the Appellant’s representative, Jacksons, a set of draft directions for his
agreement. These proposed that the appeal be allocated to the complex category and 35 that (so far as relevant to the present application) the Appellant’s witness evidence
should be served first.
5. On 10 July 2015 Mark Jackson of Jacksons replied that he did not agree
HMRC’s proposed directions and responded with alternative proposals. These
proposed that the appeal be allocated to the standard category and that (so far as 40 relevant to the present application) HMRC should serve their witness evidence first.
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