Upper Tribunal Tax and Chancery Chamber

UT/2022/000157 - [2024] UKUT 00346 (TCC)

Fecha: 10-Jul-2024

The FTT Decision

The FTT Decision

198.

The FTT began the section of its decision headed “Quantum” by addressing a question relating to the interaction of section 73 VATA and the civil evasion penalty provisions in section 60 and section 61 VATA. The FTT concluded (at FTT [656]) that the “best judgment” principles were relevant to determine the amount of VAT “evaded or sought to be evaded” for the purposes of section 60 VATA. There is no challenge to that conclusion in these appeals.

199.

The FTT then set out the case law principles applicable to best judgment assessments (FTT [657]-[660]). We did not understand there to be any material disagreement between the parties as to the principles which should be applied, nor is there any argument that the FTT did not identify the correct principles.

200.

The relevant passage to which these grounds of appeal refer is at FTT [661]-[664]. We have set out the passage below once again, for ease of reference:

661.

In the present case, as was clear from their written opening submissions, the appellants set out their challenge to Mr Foster's "best of their judgment" assessments long before the commencement of the hearing, indeed this was questioned by Mr Simmonite in the 2014 Report (see paragraph 538, above). Accordingly, the first question for us is whether Mr Foster rejected material available to him on the basis that he had closed his mind to the possibility that it might be credible or, to adopt the words of Woolf J, did Mr Foster "fairly consider all material" before him when making the assessment against SA?

662.

Although he failed to engage with, or even consider, the critical analysis of the York Wines SAGE records undertaken by Mr Simmonite, as this information post-dated the assessment, it cannot have a bearing on whether it was made to the best of his judgement. However, the same cannot be said to the York Wines bank statements. Mr Foster confirmed in evidence were in his, or at the very least his team's, possession at the time he made the assessment against SA. As he said, he did not look at these bank statements as it was "something that didn't occur to me at the time."

663.

Mr Foster, whose evidence that he "was mindful of the nature of a best judgment assessment" shows that he was clearly aware of the Van Boeckel criteria when he said that he did not "choose" not look at the bank statements and that it was not a case of "looking at them and ignoring them" (see paragraph 534, above), must have made a deliberate decision not to have taken the York Wines bank statements into account. To say otherwise, as he did, is in our view yet another example of the combative, evasive and obstructive nature of how he gave evidence. In any event it is clear that, no matter how it is described, he simply did not "fairly consider" all the material in his possession no matter how relevant it was and did not even consider its credibility but, having reached a conclusion in relation to the assessment schedule decided to stick with it come what may.

664.

Given the seriousness of Mr Foster's failure to consider or even evaluate the material before him, it must follow that not only can the assessment against SA not have been made to the best of his judgment but that had it been appealed by SA it would have been necessary, in the interests of justice, for it to have been set aside. As Mr McGuinness fairly accepted, if we came to such a conclusion, because the assessment was the foundation for the s 61 VATA penalty our decision in relation to the assessment would necessarily feed into that separate determination with the result that the appeal, by Mr Malde, against the penalty under s 61 VATA must succeed.

201.

As can be seen from this passage, the first question that the FTT identified in its consideration of the assessment on SA was whether Mr Foster had “fairly considered” all the material before him when making the assessment (FTT [661]). The terms of this question were taken from the judgment of Woolf J in Van Boeckel.

202.

The FTT then highlighted two main deficiencies in Mr Foster’s assessment (FTT [662]). The first deficiency was that Mr Foster did not take into account some of the criticisms of the SAGE accounting records of York Wines, which had been raised by Mr Simmonite in his evidence (FTT [486]-[510]). The second was that Mr Foster chose not to refer to certain bank statements of York Wines from periods between 2004 and 2007, although they were available to him. The level of SA’s trading with York Wines was, for reasons that we discuss below, critical to Mr Foster’s assessment on SA. That assessment was made on the basis of York Wines’ SAGE records, but did not reflect information in the bank statements (FTT [553]-[537]).

203.

The FTT decided that the relevant failure was Mr Foster’s failure to take into account the bank statements. The FTT found as a fact that Mr Foster had made a deliberate decision not to take the statements into account and therefore that Mr Foster did not “fairly consider” all the material in his possession (FTT [663]). These findings led to the FTT’s decision – that it would have been necessary to set aside the entire assessment “in the interests of justice” – and so to its conclusion that the appeal against the related penalty must succeed (FTT [664]).