UT/2023/000126 - [2025] UKUT 00145 (TCC)

Under the Proceeds of Crime Act 2002 (“POCA”) the National Crime Agency (“NCA”) can carry out HMRC’s tax and penalty assessment functions, where certain qualifying conditions are met. In its decision of 21 September 2023, the First-tier Tribunal (“FTT”) upheld a number of tax and penalty assessments which the NCA made on the Appellants, a married couple, Mr Butt and Mrs Begum. The tax assessments were discovery assessments for tax years 1996/7 to 2012/13 totalling £744,121.76 for Mr Butt and totalling £151,463.22 for Mrs Begum in respect of tax years 1997/8 to 2011/12 (“the FTT Decision”). With the permission of the FTT, the Appellants appeal against the FTT Decision on various grounds arguing that the FTT was wrong not to have found that the assessments were invalid.

The Appellants’ central ground of appeal is that the FTT failed to recognise the particular burden that lay on the NCA, for the purposes of the extended time limit provisions in s36 Taxes Management Act (“TMA”) and which applied to the discovery assessments that had been made. The Appellants argue that the NCA was required to prove a loss of tax arising from a specific trade source. In the circumstances of this case, the alleged trade must have been money laundering. The NCA could not meet that burden and it was not open to the FTT to find that there had been a tax loss that was derived from a money laundering trade based on the evidence before it. The assessments were therefore invalid.

The NCA defends the FTT Decision and the validity of the assessments. It submits that s36 TMA required it to establish a prima facie case that there was a tax loss, which it did. It was not necessary for the NCA to prove the tax loss or that the tax loss arose from a trade of money laundering.