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The Grounds of Appeal
The Grounds of Appeal
On 25 November 2022, HMRC made an in-time application for permission to appeal against the FTT Decision on six grounds. The grounds were set out in detail in the application. In summary, they were as follows:
the FTT erred in law when it concluded “in general terms” that the burden of proof fell on HMRC to establish the allegations before the tribunal and the liabilities to penalties (FTT [593]-[596]);
the FTT erred in law in its approach to the issues and evidence by compartmentalizing factors rather than examining the totality of the evidence;
the FTT’s conclusion (at FTT [643]) that Adrena “supplied” the alcohol in the UK (and that Global did not) was demonstrably inconsistent with the underlying evidence;
the FTT erred in law in concluding that there was a breach of the “best of their judgment” requirement in section 73 VATA (in relation to the liability of SA, which underlies the civil evasion penalty);
in the alternative to (4), even if there had been a breach of the “best of their judgment” requirement in relation to some elements of the assessment, it was an error of law to set aside the whole assessment rather than correcting the amount to a fair figure (FTT [662]-[663]); and
the FTT failed to give any or adequate reasons with respect to a number of key matters set out in the application.
The FTT granted permission to appeal on all grounds on 9 December 2022.
- Heading
- Introduction
- Background
- VAT
- Excise duties
- The FTT Decision
- The Grounds of Appeal
- Ground 1: the burden of proof
- Background
- The FTT Decision
- The parties’ submissions in outline
- The relevant case law principles
- The burden of proof in tax appeals
- The burden of proof in penalty appeals
- DLN
- Penalties under Schedule 24 FA 2007 and Schedule 41 FA 2008
- Ground 2: approach to the issues and evidence
- Background
- The FTT Decision
- Discussion
- Conclusion
- Ground 3: conclusions inconsistent with the underlying evidence
- Background
- The FTT decision
- The parties’ submissions in outline
- Discussion
- Application to the facts of this case
- Conclusion
- Ground 4: breach of “best judgment” requirement
- Background
- Relevant case law principles
- There are two distinct questions which arise where an assessment purports to be made under section 73(1) VATA: first, whether the assessment has been made under the power conferred by that section; an
- The test as to whether an assessment is made to the best of HMRC’s judgment is classically set out in the judgment of Woolf J in Van Boeckel , at page 292e-293a, where he said this
- As to whether an alleged error in an assessment is to be taken as evidence that the assessment was not made to the best of HMRC’s judgment, the relevant question is whether the mistake is consistent w
- There are, however, dangers in an over-rigid adherence to a two-stage approach (i.e. first, validity; second, quantum) to a challenge to a best judgment assessment. The important issue for the tribuna
- The FTT Decision
- The parties’ submissions in outline
- The only relevant test of whether the assessment met the best judgment requirement was whether the mistakes in the assessment were “consistent with an honest and genuine attempt to make a reasonable a
- Application to the facts of this case
- Ground 4
- Ground 5
- Conclusion
- Background
- In relation to Ground 3
- In relation to Ground 4
- In relation to Ground 5 Why, if there was a breach of the best judgement requirement, it rejected the Court of Appeal’s guidance in Pegasus Birds at [23-29] not to automatically set aside the whole assessment but instead to
- If the Tribunal considered Mr Foster’s failure to consider the York Wine bank statements was so “serious or fundamental” that it required the whole assessment to be set aside ( Pegasus Birds [29]), wh
- The parties’ submissions in outline
- Discussion
- Application to the facts of this case
- Conclusions