TC09602 - [2025] UKFTT 00930 (TC)

Mr Gill was and remains the sole shareholder of PSGSL. That company operated as a subcontractor providing labour to various contractors and was registered with the Construction Industry Scheme (“CIS”). In the period between 01/15 and 06/19, tax of £5,903,646.39 was deducted and paid over to HMRC under the CIS by contractors in respect of supplies from PSGCL.

HMRC compared the grossed-up sales figure (based on the CIS returns) with PSGSL’s VAT returns, and decided the company had underdeclared its supplies for VAT purposes. On 16 February 2022, HMRC issued PSGSL with a VAT assessment of £3,477,749 for periods 01/15 to 06/19. On 1 June 2022, Weightmans, a leading law firm, wrote to HMRC on behalf of Mr Gill requesting detailed particulars and supporting documentation to enable Mr Gill to respond.

On 26 August 2022, HMRC issued PSGCL with a penalty under FA 2007, Sch 24 para 1 of £1,825,818.08 for the same VAT periods. On the same day, HMRC issued Mr Gill with a PLN of the same amount under FA 2007, Sch 24 para 19 on the basis that the deliberate inaccuracies in the VAT returns were attributable to Mr Gill as an officer of PSGCL. The decision was upheld on statutory review, and on 2 December 2022, a Notice of Appeal was filed with the Tribunal against the PLN. The Notice of Appeal said that the representative was

“Nathaniel Monk

T M Sterling Ltd.”

The grounds of appeal were that Mr Gill had not acted deliberately, and in particular:

“HMRC’s ‘Penalty Explanation’ letter, dated 22nd July 2022, offers very little insight in support of its assertion that the purported loss of tax was brought about as a result of deliberate behaviour – and certainly not to the extent required to discharge the burden of proof…”