[2025] UKUT 00377 (TCC)

The FTT at [76], stated:

“By their skeleton argument HMRC also invite me to uphold the Penalties in identified sums. I have spent some considerable time trying to calculate the basis on which the revised penalties have been calculated. The penalty schedule provided by HMRC does not add up to the total figure claimed and I do not therefore know on what basis the penalties have been calculated. The Penalties for 1999/00 and 2000/01 remain at 192.5% of the tax assessed. However, for later periods the relevant correlation no longer applies. I have tried to determine whether HMRC has sought to split the calculation between onshore and offshore errors but that does not appear to be the case. I do not therefore know on what basis the Penalties have been calculated but set out below the percentages for each year. On the basis that the penalty percentages are equal to or less than 192.5% for Sch 18 I am satisfied that I consider them as presented to me.”

Ms Duncan submits that, despite the uncertainty it identified, the FTT upheld the penalties in full and confirmed the characterisation of the conduct as deliberate ([153]). She contends that the Decision did not identify which parts of HMRC’s penalty calculations were accepted, how any discrepancies were resolved, or whether any adjustment was made.

I reject this ground of appeal as unarguable.

The FTT’s reasoning at [76] must be view in context. Paragraphs [17], [145], and [158] of the Decision are also relevant. At [17], the FTT set out the relevant legal framework including that these penalties under Sch 18 are charged at 200% of the potential lost revenue (the “PLR”) and “Where a taxpayer provides full cooperation in telling, helping, and giving the penalty rate can be reduced to 150% of the PLR”. At [145], the FTT records HMRC’s submissions that they allowed a reduction of 5% (of the penalty range) for each of telling, helping, and giving. The effect of these reductions, and how it results in a penalty value of 192.5% of the PLR was explained at paragraph 311 of HMRC’s written submissions for the hearing:

“The Respondents have allowed a 15% reduction. This reduction is applied to the penalty window (the difference between the minimum chargeable penalty and the maximum chargeable penalty). The penalty window in this case is 150% to 200%, or 50 percentage points. 15% of the 50 percentage points is 7.5 percentage points. The maximum penalty of 200% of the PLR is therefore reduced by 7.5 percentage points for a total penalty of 192.5% of the PLR.”

At [158], the FTT records its conclusion that the reduction given is generous.

In the light of the rest of the Decision and reading the whole paragraph in context, it is tolerably clear that the FTT finds at [76] that:

The FTT would have upheld penalties that were 192.5% of the PLR.

Some penalties were less than 192.5% of the PLR.

However, as it is not clear why the penalties are less than 192.5% of the PLR, the FTT will not increase them to 192.5%.