Upper Tribunal Tax and Chancery Chamber

UT (Tax & Chancery) UT/2025/000047 - [2025] UKUT 00362 (TCC)

Fecha: 06-Oct-2025

Summary of HMRC’s oral submissions in support of its PTA application and written submissions

Summary of HMRC’s oral submissions in support of its PTA application and written submissions

46.

In his oral submissions, Mr Tolley made five points by way of overview in relation to his submission that the essential question was why is it in the interests of justice and fair for Ducas not to be required now to disclose adverse documents (either as a result of a search or of documents which it already knows are adverse), namely:

(1)

the reason given by the FTT at [22] of its Written Reasons is that it is not enough that HMRC have alleged dishonesty on the part of Ducas;

(2)

however, this is not a case of a mere allegation of fraud – it is the central premise of HMRC’s case;

(3)

further, it is not a mere allegation – by the time of the CMH, HMRC had provided sufficient evidence to the High Court to obtain the Freezing Orders;

(4)

Ducas has made a positive case that it acted honestly – it is not merely putting HMRC to proof on the allegations made by HMRC; and

(5)

it is positively alleged by Ducas that the Agencies knew of and were complicit in the production of documents that stated that PAYE and NICs were being deducted and accounted for to HMRC. Ducas is putting forward what was said by Mr Tolley to be the “surprising proposition” that documents containing incorrect information (eg payslips) were provided by Ducas to the Agencies for illustrative purposes. This explanation was provided by Ducas in its Reply to HMRC’s SOC on 7 May 2025 (ie after the date of the CMH); but Ducas had already stated in its grounds of appeal that the Agencies were “well aware” that the Enix Workers were operating through PSCs; and a witness statement dated 15 January 2025 of a director of Ducas in relation to the High Court proceedings had included a similar reference.

47.

Mr Tolley submitted that the FTT had made three types of error in failing to direct that Ducas should give the same disclosure as HMRC:

(1)

it adopted the wrong approach in principle, in that where the same factors apply to both parties, the same result should follow. At [20] of the Written Reasons the FTT took account of the availability of documents in ordering extended disclosure against HMRC, stating “it is likely that HMRC will have access to documents of which the Appellant is unaware”; but the FTT did not consider whether Ducas might have documents which were not available to HMRC when considering whether to make an order against Ducas. This was a relevant factor and it was not applied equally to both parties;

(2)

the FTT applied different tests for disclosure against Ducas and HMRC; and

(3)

the decision took account of an irrelevant factor (that HMRC was making a mere allegation of dishonesty) and failed to take account of relevant factors. Mr Tolley submitted that when considering whether to depart from Rule 27(2), all relevant circumstances should be taken into account, and four are of particular cogency:

(a)

the nature of the proceedings, ie what the case is about;

(b)

the specific issues in the case and whether they are suitable for disclosure;

(c)

the quality/extent of the case that is advanced – whether it is a mere allegation, or fully particularised; and

(d)

the likelihood of the existence of other documents that have not already been made available. It is likely that there are documents in Ducas’ control relevant to the Fraudulent Documents Issue that HMRC does not have; HMRC had not obtained documents from Ducas by exercising its statutory powers as it had obtained the Freezing Orders and issued the section 8 Decision.

48.

Mr Tolley submitted it was “quite simply wrong” ([TS/p16/19]) for Ducas to say (as they did in the Ducas UT Skeleton) that HMRC had not applied for a direction for extended disclosure against Ducas. HMRC’s position was that HMRC had communicated to Ducas before the CMH that its position was that “if an order for search-based disclosure was made against HMRC, then a reciprocal order should be made against Ducas” ([TS/p19/16-18]), and this correspondence was before the FTT. The CMH took place over a full day and decisions were taken by the FTT in stages – once the FTT, having heard from the parties, decided it would issue directions for disclosure and evidence, HMRC made an oral application for extended disclosure against Ducas at the CMH. This application was, Mr Tolley submitted, made on the premise that an order for extended disclosure was to be made against HMRC.

49.

Mr Tolley reiterated that reciprocity was at the heart of HMRC’s application; but also made submissions as to the circumstances of the case which supported an order for disclosure being made against Ducas. We consider the formulation of these submissions further in the context of addressing the application made by HMRC to the FTT and the basis for such application.

50.

Mr Tolley acknowledged that the FTT had expressly contemplated the possibility that HMRC might make an application for specific disclosure at a later stage, but submitted that this would be unsatisfactory for a number of reasons:

(1)

HMRC may not be able to identify from the pleaded issues and particulars of Ducas’ case the specific documents which should be sought by such an application and there is a risk that relevant documents may be missed. This risk was submitted to exist even if disclosure was sought by description of categories of documents;

(2)

Given that Ducas is making a positive case, the burden should be on Ducas to search and provide adverse documents rather than for HMRC to request disclosure; and

(3)

Ducas is due to serve its evidence shortly and the next case management hearing is listed for 26 November 2025. There is a narrow time period for a contested application for specific disclosure (and HMRC anticipates that any application would be contested).

51.

HMRC asked the UT to grant permission to appeal, allow the appeal and issue its own case management direction for Ducas to produce extended disclosure on the Fraudulent Documents Issue when it produces its own evidence (the deadline for which could be extended from that currently required).