UT/2024/000069 - [2025] UKUT 00236 (TCC)

The principal submissions by the Lead Appellants under this ground of appeal are founded on the fact that the FTT had rejected HMRC’s submission that they had adequately pleaded fraud or dishonesty against particular individuals: see [332] and [333] of the FTT’s decision.

It is then said to follow, as a matter of principle and logic, that once the FTT had done that, it could not properly go on to find that the fraud (which HMRC said those individuals were responsible for) had, nonetheless, been established: the FTT erred in finding that the whole could be greater than the sum of its parts. This error was said to be compounded by the fact that it involved the FTT reaching its decision on a basis that was different from that advanced by HMRC. The Lead Appellants claim that proceeding in this way was procedurally unfair.

We are unable to accept those submissions.

HMRC put forward their case that the MUC scheme was fraudulent, relying on a range of factors. We have already found that the way in which HMRC pleaded their case was sufficient to make the Lead Appellants aware that a fraud was being alleged. It was, in our view, the cumulative impact of the fifteen separate matters identified by the FTT at [329] of its decision that was critical to the decision made by the FTT that the scheme as a whole was fraudulent. Those matters framed the FTT’s separate detailed findings at [339] to [345] all of which were relied on by the FTT in reaching its conclusion at [347] that the VAT numbers of the Lead Appellants were used for fraudulent purposes. The conclusion at [347] involved the drawing of inferences from the findings of fact made earlier in its decision and from all the circumstances of the case. We can detect no error of law in the FTT proceeding in this way.

Nor do we consider that the allegedly different way in which HMRC presented the case at the hearing before the FTT affects this conclusion. It cannot be said, in our view, to “compound” the basis on which the FTT came to its conclusion when that basis was, as we hold above, open to the FTT in the first place. So far as there is anything in this point, it would not be a failure of principle or logic in the decision-making on the part of the FTT but would be an issue concerning procedural unfairness, a matter that we discuss in connection with grounds 3 and 4.