QB-2020-004171 - [2025] EWHC 2773 (KB)

In or about March 2016, the CPS, who say that they applied the Full Code Test for Crown Prosecutors, authorised multiple charges of cheating the Public Revenue in respect of C1 and C2 relating to evasion of VAT as well as PAYE/National Insurance Contributions and student loan repayments which had been deducted from the Claimants’ employees’ salaries (the “Charges”). The total amount allegedly evaded was £727,203.

C1 and C2 pleaded not guilty. In January 2017 C1 and C2’s first trial commenced. As a result of issues relating to the jury and the ill-health of defence counsel the trial was discontinued.

On 10 July 2017 a second trial commenced. An application was made by the Defence to stay the criminal proceedings as an abuse of process on the grounds that HMRC: (i) misled Croydon Magistrates Court when applying for the Warrants, (ii) misled C1 to believe that it would assist him in regularising his tax affairs/allowing him sufficient time to pay all arrears (Ms Laker’s comments), (iii) acted with the improper intention to close down the brewery business, (iv) improperly manipulated the Applications to prevent registration, and (v) was responsible for “serious executive misconduct” by its officers. The Crown Court Judge dismissed this application.

At the end of the prosecution case an application was made on behalf of C1 and C2 of ‘no case to answer’; C1’s application was rejected. C2’s application was granted. As regards C1, the Judge said as follows:

“It is a simple issue to be tried here and that is why it was that the defendant did not pay PAYE, VAT and National Insurance and student loan deductions; a very simple issue for the jury to determine.

On the question of a case to answer; could a jury, properly directed, convict these defendants? I shall take them one at a time; the first defendant. He is the brains behind the brewery. I do not mean that in any discourteous to the second defendant but it is his brainchild; the means by which he thought, he says, his confiscation order could be paid. He was in day-to-day control of the operation and involved in engaging and trying to engage accountancy help in 2012, the autumn of 2014 and on the day before his arrest. No VAT to speak of was paid, nor any PAYE, National Insurance or student loan deductions were paid during the indictment period. This amounts, we now know, to [be] about £700,000 unpaid.

Even if the VAT position was not easily quantifiable in 2013 and 2014, the defendant must have known that he was not entitled to retain the other deductions. He must also have known that, overall, there was a VAT liability. It is open to a jury that that retention of those sums was deliberate with the dishonest intention to not pay the Revenue such that it calls for an explanation from the defendant, should he choose to give evidence.”

Thereafter: