TC09641 - [2025] UKFTT 01115 (TC)

Mr Lambert was the sole director of Fulfillment Logistics UK Ltd (“FLUK”). On 20 February 2019, HMRC issued a decision denying FLUK the right to deduct input tax of £1,011,973 on the purchase of imported contact lenses in VAT periods 10/13 to 10/18 inclusive. HMRC’s grounds were that these transactions were connected with the fraudulent evasion of VAT by Contactlenses Ltd (“CLL”), FLUK’s customer, and FLUK actually knew or should have known of that fact. Therefore, according to HMRC, FLUK’s right to deduct input tax could be denied under the principles set out by the Court of Justice of the European Union in Axel Kittel v Belgium Case C-439/04 (“Kittel”).

Also on 20 February 2019, HMRC issued a decision to assess FLUK for £293,775 of output tax on supplies of services to CLL during VAT periods 10/13 and 04/17 to 10/18 inclusive, on the grounds that FLUK’s customer, CLL, had a fixed establishment in the UK.

FLUK appealed those decisions to this Tribunal. The appeal was heard over four days in June 2022, with Mr Lambert giving evidence as the sole witness for FLUK. The Tribunal’s decision, issued on 13 November 2022, was to dismiss FLUK’s appeals. The decision is reported at Fulfillment Logistics UK Ltd v HMRC [2023] UKFTT 131 (TC) (“Fulfillment Logistics”). FLUK did not appeal this decision.

Certain findings of the Tribunal in Fulfillment Logistics that are relevant to this application are set out in the Appendix below.

On 7 September 2024, HMRC issued FLUK with a penalty assessment under FA 2007, Sch 24 in respect of the inaccuracies in the VAT returns for the periods in which the relevant transactions took place (i.e. the transactions that were considered by the Tribunal in Fulfillment Logistics).

The penalty was in the amount of £1,533,000. This was calculated on the basis that the potential lost revenue was £1,764,830, which HMRC say is the combined total of the VAT assessments and adjustments to VAT returns made as a result of their decisions on 20 February 2019. The penalty was calculated at 88% of the potential lost revenue, on the grounds that the behaviour giving rise to the inaccuracies was deliberate and concealed, and the disclosure of the inaccuracies to HMRC was prompted. A penalty reduction was given for the quality of disclosure, but HMRC did not consider that there were any special circumstances.

Also on 7 September 2024, HMRC issued Mr Lambert with a PLN for the full amount of the penalty, on the basis that the underlying deliberate behaviour was attributable to Mr Lambert’s actions as an officer of FLUK.

FLUK did not appeal against the decision to issue the penalty, but Mr Lambert sought a review of the decision to issue the PLN. HMRC’s reviewing officer upheld the PLN and Mr Lambert appealed, on 30 January 2024, to the Tribunal.

My behaviour was neither deliberate nor concealed, as is claimed. I did not know about the alleged fraud that was claimed.

All VAT returns submitted were done so in the belief that there were no inaccuracies.

I am being unfairly held accountable for actions that I have been wrongly accused of, and as such I am appealing against the decision to hold me accountable for the VAT penalty issued to the company of which I was the sole director.

The relentless persecution I have faced under the guise of these false accusations has had an immense human impact, including causing ongoing mental distress, notification of which HMRC has received from my GP.

Notwithstanding my innocence, the level of the penalty is such that it is non-sensical that it even be considered to be assigned to me personally, as it would be, even before the ruinous effects of HMRC’s unfettered actions, simply impossible for me to meet.

The Appellant’s appeal does not represent an abuse of the Tribunals process given that the previous FTT process, to which the Respondents’ reference as points (i)-(iii) of the Grounds of Appeal seeking to re-litigate, was in respect of the Company, Fulfillment Logistics UK Limited, as stated on the cover page of the document provided by the Respondents as “Annex A” of their Application. The Appellant’s appeal is in respect of the Appellant as an Individual.

The “European Convention on Human Rights – Article 6” sets out that “everyone is entitled to a fair and public hearing” which the Appellant, as an Individual, has yet to receive.

Whilst the Respondents may seek to dismiss points (iv) and (v) of the Grounds of Appeal as unarguable, illness relating to my mental health as highlighted at point (iv) must be held in consideration in accordance with the “Equality Act 2010”.

The Appellant’s Arguments For Dismissal Of Respondents’ Application demonstrate that the Appellant’s Grounds of Appeal is not an abuse of the FTT’s process as they do not seek to re-litigate issues previously determined by the FTT, as that FTT process related to another Appellant, but seek to ensure that the Appellant receives what is entitled to “everyone” under the “European Convention on Human Rights – Article 6”.

Nor should the matter of mental health illness not be held in consideration by simply labelling it as “unarguable”, which could be considered to contravene the “Equality Act 2010”. Accordingly, the Appellant seeks that the FTT dismisses the Respondents’ application for Direction for the Appellant’s Grounds of Appeal to be struck out and that the Appellant’s appeal proceeds.