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

It is apparent from the warrant application that the criminal offences being considered comprised cheating the public revenue contrary to common law by evading VAT contrary to s. 72 (1) of the Value Added Tax Act 1994 and that C1 was the primary suspect. This was not an investigation about beer tax or about trading in beer without a beer licence. Nor was it connected with the confiscation order and the amounts not paid in connection therewith.

It sufficed in order to apply for a warrant that there are grounds for reasonable belief that (i) C1/C2 had committed a criminal offence, (ii) there was material on the premises in respect of which the warrant was sought which was likely to be of substantial value to any criminal investigation. It is to be borne in mind that LFCP had not accounted for a vast sum of VAT for nearly two years comprising about £727,000 and had only made very small payments of VAT which could not reasonably have reflected the VAT owed. Further, there were protracted periods of time during which there had been a failure to provide information requested on many occasions.

Irrespective of whether beer tax should have been paid, the VAT had been generated on a turnover of millions of pounds with minimal VAT having been paid. Such was the size and period of the non-payments that there were reasonable grounds for believing that this was a deliberate cheating of HMRC. Likewise, it gave rise to reason to believe that access to the premises would not be granted without a warrant and/or that entry to the premises might be frustrated and/or that immediate access was required.

A factor to be considered in these allegations particularly against Mr Muldoon is that in the warrant application, he specifically stated that he did not consider at the time that C2 was involved in the fraud. That by itself has a different perspective from someone who had suspended honesty and objectivity in order to bring down the Claimants.

The summary of background information regarding the confiscation order and the Beer Duty were not the foundation of the application. That they were background is apparent from a reading of the warrant application which defined the offences which were being investigated. They did not include the non-payment of Beer Duty or matters relating to the confiscation order. It is therefore plain that if there had been inaccuracies and omissions in the matters set out in paragraph 79ii about the confiscation order and in paragraph 79iii of the RRAmPoC about the brewing licence as alleged, this does not establish or lead to an inference of a lack of RPC in respect of the fraudulent evasion of VAT or that the belief in the RPC on the part of Mr Muldoon and Ms Chipperton was not honestly held. It follows that these matters do not support a case of absence of objective or subjective RPC in respect of the fraudulent evasion of VAT. Likewise, the pleaded particulars do not lead to inferences from which malice in respect of the case relating to non-payment of VAT and corporate tax can be inferred.

Further, the state of mind of Mr Muldoon and Ms Chipperton was dependent on their knowledge and not the collective knowledge of HMRC employees. Their remit was in respect of a criminal prosecution. They were not involved in civil recovery of outstanding taxes, which was the remit of Ms Laker and Mr Thomas. Whereas they may have been looking at the prospect of making a civil recovery, Mr Muldoon and Ms Chipperton were considering the matter from a criminal perspective and not civil recovery. If Ms Laker in particular was more benevolent than Mr Muldoon in particular, contrary to the Claimants’ case, that does not take the case very far because of Mr Muldoon’s different role and perspective. The analysis of the Claimants that it was in any way improper for Mr Muldoon and Ms Chipperton to be considering criminal prosecution for such a sustained failure to pay a large amount of tax has no basis whatever the approach of Ms Laker. Further, Mr Muldoon and Ms Chipperton were not involved in brewing licence applications and registration which was the remit of Mr Ansah and Mr Parkinson. The fact that they might have had a lot to add to background matters within their remit does not mean that Mr Muldoon or Ms Chipperton would have appreciated that there was more to add, if that was the case. If there were errors or omissions on the part of Mr Muldoon or Ms Chipperton in the section about the background information or more generally, this does not form a basis on which to infer malice in connection with the procurement of the warrant. The Judge in the criminal trial, HH Judge Morrison, was critical in his summing up about aspects of HMRC’s approach including a lack of a joined-up approach and thinking between the various people involved, about the inexperience in the relevant fields of Mr Ansah and Mr Parkinson, about the refusal to accept Beer Duty before registration and other aspects of the registration process. To the extent that these criticisms were justified, they may be evidence of errors, but not of malice. When making these criticisms in the early part of his summing up on 25 July 2017, the Judge did not suggest bad faith on the part of HMRC.

The inferences sought to be derived in respect of Mr Muldoon and/or Ms Chipperton in respect of the warrant application are in my judgment without a real prospect of being established. As Cockerill J emphasised in the case of King v Stiefel at [23 - 25], cogent evidence is required to justify a finding of fraud or other discreditable conduct, reflecting the court's conventional perception that it is generally not likely that people will engage in such conduct. So it is that in reviewing whether a party has got to the foothill of the mountain to climb in a case of fraud or other disreputable conduct, the Court is entitled to subject the case to a degree of scrutiny to see if there is a real rather than a fanciful prospect of establishing the case. The Court is not bound to take at face value and without analysis everything that a claimant says in his statements before the court, particularly in a case such as the one which is based on inferences in respect of the knowledge and intention of Mr. Muldoon and/or Ms Chipperton.

Further, the Claimants are unable to prove a damages claim for malicious procurement of a warrant. Even if the warrant application had failed, C1 would have still been arrested lawfully on suspicion of cheating the public revenue contrary to common law (with reference to VAT and other revenue/PAYE obligations). Further, in the light of the Refusal of 2 December 2014, LFCP would have been unable to brew beer. C1’s reputation was already tainted due to C1’s criminal record for drugs and would have been further damaged due to the prosecution for fraudulent tax evasion. In any event, LFCP continued to operate for more than a year until it went into administration on 5 April 2016 due to its inability to settle Crown debts. It went into liquidation on 23 October 2017: see RRAmPoC para. 8. In any event, HMRC's officers involved in the civil investigation would still have attended the premises and on the Claimants’ case would have been granted access.

Looking at the case as a whole and applying caution bearing in mind the strictures not to rush to judgment at an interim stage without further disclosure and a trial and cross-examination, this a case where there has not been established a real prospect of success that there is a subjective or objective case on RPC or that Mr Muldoon and/or Ms Chipperton will be shown to have had malice as alleged or at all. Nor is there any other compelling reason for the case to go on to trial. For all these reasons, the case about malicious procurement of a search warrant should be struck out: alternatively, there should be summary judgment in respect of the same.