TC09659 - [2025] UKFTT 01211 (TC)

Miss Brown urged us to find that, given the volume of metals traded and the significant sums involved, a prudent business would have had clear written terms in place, to deal with payment and ownership at the very least.

Miss Brown made much of the absence of contractual documents as something that ought to have raised suspicions. In relation to this, SF asserted that WhatsApp messages would have shown the trading, but unfortunately these were not available to him since they would have been messages with TP. SF also pointed out that the SKM business had been closed several years ago and therefore it was not surprising he no longer had some of the emails and messages which would have backed up his evidence. In any event, these messages were not before us in evidence. It seemed to us entirely plausible that agreement of terms for delivery of metal (amounts, price, etc) could well have been agreed on the phone or by WhatsApp message. The terms were not complex and would not have required lengthy written contracts. SF’s explanation of why these messages were not in evidence was also entirely plausible.

Miss Sheldon urged upon us (a) that lack of documentation is not uncommon in businesses and (b) to SK/KG’s evidence that this was normal in the metal trading business. She pointed out that SKM’s rapidly growing business dealing with relatively small private sector suppliers in the scrap metal trade can be contrasted with the position that would have applied in dealings with large organisations or the public sector where written contracts would be expected.

We accepted as a fact SF’s evidence (in the absence of any evidence to the contrary) that there was no particular need for written contractual documentation because either the metal would be delivered (and paid for) or it would not (in which case payment would not be made); and that many of the suppliers were not particularly literate and therefore would not be interested in lengthy contractual documentation.

From SK/KG’s evidence and from our own experience of dealing with small businesses we agreed with Miss Sheldon. We consider that there is a range of business models some with more and some with less formality. Again therefore, we did not consider at this point assisted HMRC's case.