The Commissioners for HM Revenue and Customs v Sukhdev Mattu [2021] UKUT 0245 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Judge Timothy Herrington,Judge Rupert Jones |
| Neutral Citation | [2021] UKUT 0245 (TCC) |
| Subject Matter | 4 October 2021 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 04 October 2021 |
[2021] UKUT 0245 (TCC)
Appeal number: UT/2020/000370
INCOME TAX – CAPITAL GAINS TAX – HMRC application for tax-related penalty
under paragraph 50 of Schedule 36 to the Finance Act 2008 – Respondent’s
continuing failure to comply with an information notice – statutory conditions
satisfied - application granted – penalty imposed
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
THE COMMISSIONERS FOR HER MAJESTY’S
Applicants
REVENUE & CUSTOMS
- and -
SUKHDEV MATTU
Respondent
TRIBUNAL:
Judge Timothy Herrington
Judge Rupert Jones
Sitting in public at The Rolls Building, London EC4 on 28-29 June 2021
Ben Elliott and Laura Ruxandu, Counsel, instructed by the General Counsel and
Solicitor to HM Revenue and Customs, for the Applicants
Michael Firth, Counsel, instructed by Leigh Carr, Accountants, for the
Respondent
© CROWN COPYRIGHT 2021
2
TABLE OF CONTENTS
Section
Paragraph
Introduction
1
The reinstatement and postponement applications
3
The substantive application
8
The evidence of the parties and overview of their cases
11
First statutory condition for the imposition of a penalty -
Paragraph 50(1)(a) - whether the Respondent has become
liable to a penalty under paragraph 39 Sch 36
21
The Respondent’s case on the first statutory condition
21
Relevant Law - Schedule 36 Finance Act 2008
24
The Facts
36
Discussion and Decision
62
Second statutory condition for the imposition of a penalty -
Paragraph 50(1)(b): the failure or obstruction continues
after a penalty is imposed under paragraph 39 of Sch 36
95
The Respondent’s case on the second statutory condition
95
Relevant law - possession or power
99
The Facts
103
Trustee Documents
105
Correspondence
115
Information relating to transactions
118
Discussion and Decision
127
Third statutory condition for the imposition of a penalty -
Paragraph 50 (1)(c) - an officer of Revenue and Customs
has reason to believe that, as a result of the failure or
obstruction, the amount of tax that the person has paid, or
is likely to pay, is significantly less than it would otherwise
have been
138
Principles relevant to the application of paragraphs
50(1)(c) and 50(3) of Schedule 36 to the FA 2008
138
Issues in dispute in relation to paragraph 50(1)(c) and tax
at risk
148
Reasonableness of Officer Jackson’s belief as to the tax at
risk
158
Factual issues in dispute
159
3
Background
160
The Respondent’s tax affairs
161
HMRC’s Investigation
164
The Taj Trust and the Offshore Structure
174
Economic Settlor
176
Companies associated with the Taj Trust
190
The Chartwell Group
191
Transactions giving rise to the alleged tax at risk
193
Whether Remittances were made
202
Officer Jackson’s belief as to the Tax at Risk
205
Protective Discovery Assessments
214
Causal link
217
Conclusion as to the Officer’s belief based on the facts
245
The Law
248
Transfer of Assets Abroad Legislation
248
The Settlements Legislation
256
Remittance basis
262
Taxation of Chargeable Gains Act 1992
266
Discussion and Decision
271
Tax at risk: Transfer of Assets Abroad Legislation
272
Tax at risk: the remittance basis
280
Tax at risk: Settlements Legislation
282
Tax at risk: Taxation of Chargeable Gains Act (TCGA) s.87
285
Causal connection between failure to comply (if
established) and underpayment of tax
289
Inability of HMRC to pursue a Paragraph 50 penalty
related to tax in respect of which HMRC have subsequently
made assessments or issued closure notices
290
The Tribunal’s analysis and determination
294
Income Tax
296
Transfer of Assets Abroad Legislation
296
Was the Respondent a transferor for the purpose of the
Transfer of Assets Abroad Legislation?
296
Motive Defence
299
Deductions for UK Tax Paid
313
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