TC09659 - [2025] UKFTT 01211 (TC)

Fecha: 18-Sep-2025

Mitigation

Mitigation

110.

Penalties may be mitigated under s70 which provides as follows.

Transactions connected with VAT fraud

(1)

Where a person is liable to a penalty under [section 60, 63,64, 67, 69A or 69C or under paragraph 10 of Schedule 11A], the Commissioners or, on appeal, a tribunal may reduce the penalty to such amount (including nil) as they think proper.

(2)

In the case of a penalty reduced by the Commissioners under subsection (1) above, a tribunal, on an appeal relating to the penalty, may cancel the whole or any part of the reduction made by the Commissioners.

(3)

None of the matters specified in subsection (4) below shall be matters which the Commissioners or any tribunal shall be entitled to take into account in exercising their powers under this section.

(4)

Those matters are—

(a)

the insufficiency of the funds available to any person for paying any VAT due or for paying the amount of the penalty;

(b)

the fact that there has, in the case in question or in that case taken with any other cases, been no or no significant loss of VAT;

(c)

the fact that the person liable to the penalty or a person acting on his behalf has acted in good faith.

(5)

In the application of subsections (3) and (4) in relation to a penalty under section 69C, subsection (4) has effect with the omission of paragraphs (b) and (c).

111.

The only aspect of the legislation on which the parties differed was in relation to mitigation. On behalf of HMRC we initially understood Miss Brown to argue that because more than 50% of SKM’s transactions by value were the subject of the Input Tax Denials, no mitigation under s70 VATA should be given at all. This was based on HMRC’s view in VATF45190. Miss Sheldon argued that there was no such legislative restriction. While we accepted VATF45190 was HMRC’s view, we could see no legislative basis that restricted mitigation under s70 in this mechanistic way. This point was later gracefully conceded by Miss Brown and, accordingly, we approached the issue of mitigation on the basis we could reduce the penalty to such amount as we thought proper under s70. We noted that s70, as it applied to a penalty under s69C, allowed us to take into account whether SKM had acted in good faith. The question of mitigation is dealt with at [202].