Upper Tribunal Tax and Chancery Chamber

UT (Tax & Chancery) UT/2023/000050 - [2025] UKUT 00123 (TCC)

Fecha: 06-Ago-2024

Conclusions

Conclusion

20.

The position I have reached on Mr Reynolds’ application, despite its lack of specifics, is that, on the assumptions I have made about the evidence (that Mr Reynolds will be able to produce the evidence he says he can and that it will prove what he says it will), I can see how Mr Reynolds might be in a position, were I to allow him to do this, successfully to challenge all the allegations against him except (c) and (h).

21.

I agree with the Authority that, even if only allegation (c) above were made good, that would constitute a breach of Statement of Principle 1 which would put a full Prohibition into the spectrum of possible regulatory actions. As P6 was the source of a significant part of the income derived, a substantial financial penalty would still be in order. However, if Mr Reynolds could make good his case in relation to the other allegations, it seems to me that the penalty could be significantly reduced. This is because of the way the penalty was calculated, which appears to start by looking at benefits flowing from particular breaches (in particular, allegations (d), (e) and (f); see paragraph 6.5 of the Decision Notice).

22.

In the April Decision, I told Mr Reynolds that this application was his last chance and told him how he should frame any application to extend the scope of the Amended Reference. Nevertheless, as explained at [17] above, I consider that I should continue to make some allowance for Mr Reynolds’ position as an unrepresented individual against whom very serious allegations have been made.

23.

Accordingly, the course of action I propose is to:

(a)

refuse Mr Reynolds permission to amend the scope of the Amended Reference to refer the Prohibition except to the extent I gave him permission to do so on 20 September 2023. The reason for this is that I do not consider that Mr Reynolds’ proposed challenges to allegations (c) or (h) to have a reasonable prospect of success, and these allegations are sufficient to put a full Prohibition into the spectrum of regulatory responses open to the Authority;

(b)

allow Mr Reynolds to amend the scope of the Amended Reference to refer the Authority’s finding that he was dishonest or reckless and lacked integrity in breach of Statement of Principle 1 based on allegations (d), (e) and (f), and in consequence the question of the penalty so far as its quantum is affected by those allegations. The reason for this is the way the penalty appears to have been calculated, which looks to start from the benefits flowing from particular breaches (in particular, allegations (d), (e) and (f); see paragraph 6.5 of the Decision Notice). If Mr Reynolds can make good his challenge to any of these allegations, that may produce a different outcome (in the form of a reduced penalty);

(c)

refuse Mr Reynolds permission to amend the scope of the Amended Reference except as set out above. The reason for this is that nothing would be obtained by a wider reference as it would have no impact on the outcome as (i) there are already sufficient grounds to justify the Prohibition, and (ii) other allegations (beyond (d), (e) and (f)) appear to have no impact on the quantum of the Penalty.

Disposition

24.

In terms of the immediate future progress of this reference, I agree with the Authority that there is not a lot of point at this stage in making detailed directions for the conduct of this reference up to a full hearing. I also agree that the Tribunal is likely to need to be heavily involved in the case management of this reference. Accordingly, for now, I ORDER THAT:

(1)

The Applicant is permitted to amend the scope of the reference to refer the Authority’s finding that he was dishonest or reckless and lacked integrity in breach of Statement of Principle 1 on the basis of the allegations described as (d), (e) and (f) in paragraph [6] above and, in consequence, the question of the penalty insofar as its quantum is affected by those allegations.

(2)

Otherwise, the Applicant’s application to amend the scope of the reference dated 17 May 2024 (including, for the avoidance of doubt, the application to amend the scope of the Reference in relation to the Prohibition Order) is refused.

(3)

For clarity, the Reference therefore comprises:

(a)

the Limitation Ground;

(b)

the Disgorgement Ground;

(c)

the Property Transfer Ground;

(d)

the Serious Financial Hardship Ground (each as defined in the document headed “Applicant’s Reply” dated 18 September 2023);

(e)

the breadth of the Prohibition Order, as defined in paragraph [54](2) of the Tribunal’s decision dated 20 September 2023; and

(f)

the allegations described as (d), (e) and (f) in paragraph [6] above, and the quantum of the penalty insofar as it is affected by those allegations.

(4)

The Authority shall by 5pm on 20 September 2024 file and serve a replacement Statement of Case.

(5)

The Authority is permitted, as part of its replacement Statement of Case, to amend its case on the Limitation Ground in the form set out at paragraphs 21A, 21B and Annex 2 to the draft Amended Statement of Case provided with its application dated 6 December 2023.

(6)

The Applicant shall by 5pm on 18 October 2024 file and serve his Reply to the replacement Statement of Case, which Reply will replace the document headed “Applicant’s Response to the Authority’s Statement of Case” dated 18 September 2023.

(7)

The Applicant shall by 5pm on 18 October 2024 file and serve his amended “Applicant’s Reply” in response to the amendments permitted by sub-paragraph (5) above.

(8)

The Authority shall file and serve any secondary disclosure list pursuant to paragraph 6 of Schedule 3 to the Tribunal Procedure (Upper Tribunal) Rules 2008 by 5pm on 30 October 2024.

(9)

There shall be a hearing to determine the directions for the further management of the reference, to be listed with a time estimate of one day, on the first date convenient to the parties and the Upper Tribunal on or after 11 November 2024.

(10)

The parties shall have liberty to apply to amend the deadlines provided in sub-paragraphs (4), (6), (7) and (8) above.

MARK BALDWIN

DEPUTY UPPER TRIBUNAL JUDGE

Release date: 06 August 2024