UT (Tax & Chancery) UT/000097/2023 - [2025] UKUT 00034 (TCC)

The Applicant has made an application dated 16 December 2024 for a direction that an issue in this reference should be dealt with as a preliminary issue. The Authority responded to the application on 7 January 2025 and the Applicant replied to that response on 20 January 2025. I have dealt with the application on paper.

I can briefly describe the nature of the proceedings based on the grounds set out in the Applicant’s reference dated 19 October 2023, the Authority’s statement of case filed on 27 November 2023 and the Applicant’s reply to the statement of case dated 15 March 2024. The Authority alleges that the Applicant, as director and chief executive of Indigo Global Partners Limited (“Indigo”), breached Principle 1 of the Authority’s Statements of Principle and Code of Practice for ApprovedPersons. Principle 1 requires an approved person to act with integrity in carrying out his accountable functions. Essentially, it is alleged that the Applicant was dishonest and failed to act with integrity by allowing Indigo to participate in a trading strategy which involved cum-dividend trades in Danish company shares so as to facilitate tax reclaims from the Danish tax authorities. It is alleged that the Applicant knew that the trades were not genuine. The tax reclaims amounted to some €91m.

In a Decision Notice dated 22 September 2023, the Authority decided to impose a financial penalty on the Applicant of some £5.9m and to make an order prohibiting him from performing any function in relation to any regulated activities.

The Applicant denies all allegations made against him in the statement of case. In short, his case is that he had an honest and reasonable belief that the trades were genuine and legitimate. The Applicant also contends that in any event part of the case against him is time-barred. Indigo was involved in the relevant trades in the period 14 March 2014 to 29 January 2015. It is contended that the Authority’s action in relation to conduct on or before 24 July 2014 is time-barred.

The Applicant also contends in his reference and in his reply that the Authority is subject to the Equality Act 2010 (“the 2010 Act”) and has unlawfully discriminated against him on the grounds of his race. The Applicant is of Indian origin and it is alleged that the Authority has failed to take any action against two comparators, namely Caucasian males in materially identical circumstances. As such, it is said that the Authority’s continuation of its enforcement proceedings against the Applicant amounts to a breach of the 2010 Act (“the Equality Issue”). The Applicant seeks to have the Equality Issue determined as a preliminary issue.

The Authority denies that it has discriminated against the Applicant, although it accepts that the Tribunal has jurisdiction to consider the allegations of discrimination in the reference.

The Applicant’s case on the Equality Issue is based on Part 5 of the 2010 Act which concerns discrimination in the context of work and employment. Section 53 applies to “qualification bodies”, and section 53(2) provides:

Section 54 defines a qualifications body as follows:

The Applicant says that the Authority is a qualifications body for these purposes because it can confer a relevant qualification. Moreover, the sanctions the Authority seeks to impose on the Applicant in the Decision Notice fall within s53(2).

The Authority contends that it is not a qualifications body in relation to Mr Teraiya, although it accepts that it may be a qualifications body in relation to permissions of anauthorised person who is a sole trader. It contends that a prohibition does not amount to the withdrawal of a qualification. Further, it contends that the imposition of a financial penalty does not fall within the scope of section 53(2)(c) because it is not exercising its powers as a qualifications body.

The Authority does not contest the Tribunal’s jurisdiction to consider the factual basis of Mr Teraiya’s claim of discrimination in determining the reference. However, it does not appear to accept that any findings the Tribunal made would affect the outcome of the reference. I take the Authority’s position to be that the Tribunal can make findings in relation to discrimination, but even if discrimination is made out, that should not affect the outcome of the reference.