TC09548 - [2025] UKFTT 00700 (TC)

Fecha: 09-Jun-2025

The Compliance Check

The Compliance Check

10.

On 11 July 2016 HMRC wrote to the Appellant setting out the effects of the SMR and asking for details of the work undertaken to determine the application of the SMR to its members since those provisions came into force in 2014. That was the beginning of a long-running compliance check. The Appellant summarised the position as follows:

“During the course of the SMR Compliance Check, the Respondents have asked 81 individual questions concerning the application of the SMR and have been sent over 1,000 pages of detailed and relevant evidence. The Appellant has answered all of the Respondents’ questions relating to the SMR addressed to it prior to the notification of the present Appeal to the Tribunal. To place this in the context of the Wider Partnership Enquiries, 284 questions have been asked by HMRC and in excess of 4,000 pages of evidence has been provided to HMRC.”

11.

The Appellant provided a bundle of over 1,000 pages, which included some 850 pages of correspondence between the parties (“the Bundle”), the bulk of which consisted of information provided by the Appellant to HMRC. It included:

(1)

the LLP agreements, both in the original form and the updated form dated 2 April 2014;

(2)

the Appellant’s view of the “relevant period” within the meaning of the SMR;

(3)

the methodology for allocating profits;

(4)

a list of LLP members;

(5)

the profit allocated to each member and how it was allocated;

(6)

copies of letters sent to new members;

(7)

samples of profit allocations sent to members for the purposes of completing their SA returns; and

(8)

details of capital contributions made by members and information about any “forgivable loans”.

12.

For HMRC’s part, a succession of officers appear to have had responsibility for the compliance check (six different individuals sent out letters to the Appellant), and many of HMRC’s later requests repeat those already answered previously.

13.

One of the matters about which the parties corresponded concerned the fraud perpetrated by the Appellant’s former tax manager and others. The key facts were provided to me by the parties, but a helpful summary was recently set out by Dias J in Tower Bridge International Services LP v Michael Viney [2025] EWHC 1184 (KB):

“[15] The BGC Group carries on business in the provision of financial services and is one of the world’s largest inter-dealer brokers. TBIS [Tower Bridge International Services]is part of the BGC Group and provides administrative back-office services to other parts of the BGC Group. Prior to his suspension and subsequent dismissal, the defendant was employed by TBIS as an “Employee Tax Advisor” responsible for preparing the tax returns for the partnership entities within the BGC Group and ensuring correct payments were made to HMRC. In this role, he was a senior employee in a position of significant trust. At the time of the fraud, the defendant’s girlfriend was Ms King, the third defendant in the main action. The defendant and Ms King are now married.
[16] In late 2020, the BGC Group discovered it had been the victim of a substantial and sophisticated fraud perpetrated by the defendant and another, Xavier Alcan, the second defendant in the main claim. The fraud dated back to January 2015. The latest known fraudulent payment occurred on 17 November 2020 and thus extended over four years. In total, the defendant and Xavier Alcan stole approximately £23.5 million by diverting payments that were due to or from the BGC Group. Primarily, but not exclusively, the payments were received from, or were due to be paid to, HMRC.
…
[22] In his Defence dated 26 May 2021 the defendant admitted that he was liable to reimburse TBIS the sums of £14,261,584.59 and $665,217.52 in relation to misappropriated payments that he admitted receiving directly or indirectly. He also admitted numerous allegations, as set out in the Particulars of Claim, that he had made false representations (including to HMRC), doctored emails and created false documents as part of the fraud.
[23] As a matter of law, the defendant was liable for the full amount of the fraud. Therefore, TBIS applied for summary judgment against him on 21 January 2022. On 3 May 2022, shortly before the hearing of TBIS’s summary judgment application, the defendant and Ms King consented to judgment in the terms set out in the Judgment Order of HHJ Walden Smith dated 3 May 2022 (“the Judgment Order”). Of significance, pursuant to the Judgment Order:
(1)
By paragraphs 1 to 8, it was declared that numerous properties and assets in the name of the defendant and/or Ms King were held on trust for TBIS, and that those assets were to be sold and the proceeds paid to TBIS in satisfaction of the judgment debt;
(2)
By paragraph 14, the defendant agreed to pay TBIS the sum of £23,650,010.67 (with credit to be given for sums realised on accounts and inquiries);…”