UT (Tax & Chancery) UT/2023/000103 - [2025] UKUT 00102 (TCC)

As we have already noted in relation to Ground 7, for an administrator to succeed in an appeal against HMRC’s refusal to discharge its liability for the scheme sanction charge, it must satisfy both parts of the test in s 268(7).

Ground 8 relates to the second part of that test, and is that the FTT made an error of law in concluding that relief under section 268 FA04 ought to be refused by reference to the requirement that it be “just and reasonable” for MLT not to have to pay the charge.

Because we have already upheld the FTT’s finding that MLT did not meet the first part of the test in s 268(7), it follows that even if MLT were to succeed on Ground 8, this would not result in the discharge of its scheme sanction charge liabilities for Ballards, Criticall and/or Gannon. Nevertheless, as the FTT considered and decided both parts of the test, and as MLT received permission to appeal on Ground 8, we have gone on to consider it.

This second part of s 268(7), like the first, requires the FTT to carry out a multi-factorial evaluative judgement with which an appeal court should be slow to interfere. In O’Mara v HMRC [2017] UKFTT 91 TC at [152]–[153], approved by the UT in Bella Figura at [70], the FTT (Judge Rupert Jones and Mr Farooq) said in relation to s 268(7):

“The statutory test…requires the Tribunal to take account of all the circumstances…it does not require any finding of dishonesty or negligence on the part of the appellants. It allows the Tribunal to examine all the circumstances surrounding the making and receipt of the unauthorised payments in each appellant’s case. This in turn allows the Tribunal to examine an appellant’s conduct or any other relevant mitigating circumstances pertaining to the payments or the appellant’s circumstances. It also allows the Tribunal to take account of the statutory scheme and the mischief the surcharge is designed to prevent.”