Karl Byers v The Commissioners for Her Majesty's Revenue & Customs, TC 07138
| Jurisdiction | UK Non-devolved |
| Judge | Dr Heidi POON |
| Judgment Date | 13 May 2019 |
| Neutral Citation | [2019] UKFTT 0310 (TC) |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
| Appellant | Karl Byers |
| Reference | TC 07138 |
| Court | First-tier Tribunal (Tax Chamber) |
[2019] UKFTT 0310 (TC)
TC07138
Appeal number:MAN/2008/1322
VALUE ADDED TAX – penalty for under-declaration – whether delays in
proceedings have interfered with Appellant’s Article 6 Convention rights –
whether the Appellant was dishonest within the meaning of s 61 of VATA –
credibility issue of witness evidence – the test of dishonesty for civil evasion
penalty – Ivey v Genting – whether apportionment of penalty due – penalty
liability not ‘discrete’ – appeal dismissed
FIRST-TIER TRIBUNAL
TAX CHAMBER
KARL BYERS
Appellant
- and -
THE COMMISSIONERS FOR HER
MAJESTY’S
Respondents
REVENUE & CUSTOMS
TRIBUNAL:
JUDGE HEIDI POON
MR LESLIE BROWN
Sitting in public at Teesside Magistrates’ and Family Court, Victoria Square,
Middlesbrough on 9 and 10 May 2018
Mr Hammad Baig, Counsel instructed by Vincent Curley & Co Ltd, for the
Appellant
Ms Joanna Vicary, Counsel instructed by Solicitor’s Office and Legal Services of
HMRC, for the Respondents
2
DECISION
Introduction
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%.
Relevant legislation
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:
60 VAT evasion: conduct involving dishonesty
(1) In any case where –
(a) for the purpose of evading VAT, a person does any act or omit to
take any action, and
(b) 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) a refund under any regulations made by virtue of section
13(5);
(b) a VAT credit;
(c) a refund under section 35, 36 or 40 of this Act or section 22 of the
1983 Act; and
(d) a repayment under section 39,
in circumstances where the person concerned is not entitled to that sum.
[…]
3
61 VAT evasion: liability of directors, etc
(1) Where it appears to the Commissioners –
(a) that a body corporate is liable to a penalty under section 60, and
(b) 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 –
(a) the amount of the penalty referred to in subsection (1)(a) above
“the basic penalty”), and
(b) 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 –
(a) 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
(b) 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.
Case law
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.
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