Mr Terence Walker & Mrs Dawn Walker v Revenue & Customs [2013] UKFTT 375 (TC) (03 July 2013)
DECISION
Introduction
1.
The Appellants, Mr Terence Walker (“Mr Walker”) and his wife Mrs Dawn
Walker (“Mrs Walker”) appeal against a penalty of £194,214 for VAT evasion
imposed by the Respondents (“HMRC”) on 12 July 2010 on Europa Building Services
Limited (“Europa”) under section 60(1) of the Value Added Tax Act 1994
(“VATA”). Under section 61(1) of VATA, HMRC decided, also on 12 July 2010,
that the conduct giving rise to the penalty was attributable to the dishonesty
of Mr Walker, the sole director of Europa, and Mrs Walker, its company
secretary, and served notices on the Appellants to that effect, which indicated
that each Appellant was liable for 50% of the penalty amount.
2.
The issues in the appeals are whether as contended by HMRC:
(1)
Europa acted dishonestly by failing to submit VAT returns on time for
eight VAT periods between 03/06 and 09/08, by paying only a proportion of the
VAT it was required to account for and by failing to correct central assessments
of their VAT liability for the periods in question; and
(2)
If there was a failure on the part of Europa, whether its conduct was
attributable to the dishonesty of Mr and Mrs Walker.
3.
Mr Walker contends that he was not dishonest as his duties as director
of the company were to tender for contracts and manage these contracts
on-site. The accountancy function of Europa’s business was outsourced to an accountancy
firm, Tamsons, who should have made the necessary returns. Mrs Walker contends
that she was not dishonest as her role was to provide a collation service
whereby she gathered the paperwork and passed it on to Tamsons. Mr and Mrs
Walker contend that if there was a failure on their part it was as a result of
disorganisation and oversight. They also contend that in any event they cannot
have any responsibility for what happened after a point in 2007, when
responsibilities for the management of Europa was transferred to a Mr Luigi
Sassi (“Mr Sassi”) along with all the business records of Europe then in Mr and
Mrs Walker’s possession.
4.
In the alternative, Mr and Mrs Walker contend that the penalties should
be mitigated beyond the 15% mitigation applied by HMRC.
5.
We consider below the relevant legislation and authorities in relation
to civil evasion penalties. We then make findings of fact based on the
evidence before us before setting out our decision and the reasons for it in
the light of the submissions of the parties.
Relevant legislation and authorities
6.
Section 60 of VATA states as follows, insofar as is relevant:
“(1) In any case where –
(a)
for the purpose of evading VAT, a
person does any act or omits to take any action, and
(b)
his conduct involves dishonesty
(whether or not it is such as to give rise to criminal liability),
he shall be liable … to a
penalty equal to the amount of VAT evaded or, as the case may be, sought to be
evaded, by his conduct.
(2) The reference in
subsection (1)(a) above to evading VAT includes a reference to obtaining any of
the following sums … (b) a VAT credit … in circumstances where the person
concerned is not entitled to that sum.
(3) The reference in
subsection (1) above to the amount of the VAT evaded or sought to be evaded by
a person’s conduct shall be construed -
(a) in relation to VAT
itself or a VAT credit as a reference to the aggregate of the amount (if any)
falsely claimed by way of credit for input tax and the amount (if any) by which
output tax was falsely understated …”
7.
Under section 60(7) of VATA the burden of proof as to the matters
specified in sections 60(1) (a) and 60(1) (b) is on HMRC; it is therefore for
HMRC to prove there was dishonest conduct for the purpose of evading VAT.
8.
Section 61 of VATA provides as follows:
“(1) Where it appears to the Commissioners –
(a) that a body corporate is liable to a
penalty under section 60, and
(b) that the conduct giving rise to that
penalty is, in whole or in part, attributable to the dishonesty of a person who
is, or at the material time was, a director or managing officer of the body
corporate (a “named officer”),
the Commissioners may serve a notice under this
section on the body corporate and on the named officer.
(2) A notice under
this section shall state –
(a) the amount of the penalty referred to in
subsection (1) (a) above (“the basic penalty”), and
(b) that the Commissioners propose, in accordance
with this section, to recover from the named officer such portion (which may be
the whole) of the basic penalty as is specified in the notice.
(3)
Where a notice is served under this section, the portion of the basic penalty
specified in the notice shall be recoverable from the named officer as if he
were personally liable under section 60 to a penalty which corresponds to that
portion; and the amount of that penalty may be assessed and notified to him
accordingly under section 76.
(4)
Where a notice is served under this section –
(a) the amount which,
under section 76, may be assessed as the amount due by way of penalty from the
body corporate shall be only so much (if any) of the basic penalty as is not
assessed on the notified to a named officer by virtue of subsection (3) above;
and
(b) the body corporate
shall be treated as discharged from liability for so much of the basic penalty
as is so assessed and notified.
(5)
No appeal shall lie against a notice under this section as such but –
(a) where a body
corporate is assessed as mentioned in subsection 4(a) above, the body corporate
may appeal against the Commissioners’ decision as to its liability to a penalty
and against the amount of the basic penalty as if it were specified in the
assessment; and
(b) where an assessment
is made on a named officer by virtue of subsection (3) above, the named officer
may appeal against the Commissioners’ decision that the conduct of the body
corporate referred to in subsection 1(b) above is, in whole or part,
attributable to his dishonesty and against their decision as to the portion of
the penalty which the Commissioners propose to recover from him.
(6)
In this section a “managing officer”, in relation to a body corporate,
means any manager, secretary or other similar officer of the body corporate or
any person purporting to act in any such capacity or as a director; and where
the affairs of a body corporate are managed by its members, this section shall
apply in relation to the conduct of a member in connection with his functions
of management as if he were a director of the body corporate.”
9.
Under section 61(1) (b), Mr Walker as director of Europa was within the
scope of this provision and Mrs Walker is also within its scope by virtue of section
61(b) being a managing officer because she was the company secretary.
10.
Section 70 provides for mitigation of penalties levied under section 60
which so far as relevant provides as follows:
“(1) Where a person is liable to a penalty under
section 60, …. the Commissioners or, on appeal, a tribunal may reduce the
penalty to such amount (including nil) as they think proper.
(2) In the case of a penalty reduced by the
Commissioners under subsection (1) above, a tribunal, on an appeal relating to
the penalty, may cancel the whole or any part of the reduction made by the
Commissioners.
(3) None of the matters specified in subsection
(4) below shall be matters which the Commissioners or any tribunal shall be entitled
to take into account in exercising their powers under this section.
(4) Those matters are –
(a) the insufficiency of the funds available to
any person for paying any VAT due or for paying the amount of the penalty;
(b) the fact that there was, in the case in
question or in that case taken with any other cases, been no or no significant
loss of VAT;
(c) the fact that the person liable to the
penalty or a person acting on his behalf as acted in good faith.”
11.
The reform of the penalties regime for various taxes, including VAT, was
effected by section 97 and Schedule 24 of the Finance Act 2007 (“FA 2007”).
Paragraph 29(d) of Schedule 24 FA 2007 (“Schedule 24”) provides that sections
60 and 61 VATA “are omitted”. Part 5(5) of Schedule 27 FA 2007 makes provision
for sections 60 and 61 of VATA to be repealed.
12.
Section 97 FA 2007, which introduces Schedule 24, makes provision for an
order to commence Schedule 24 and that order may include incidental,
consequential or transitional provisions. This power has been exercised through
the Finance Act 2007, Schedule 24 (Commencement and Transitional Provisions)
Order 2008 (“the Transitional Order”). It should be borne in mind that
Schedule 24 makes provision for penalties to be imposed where there are errors
in a taxpayer’s document submitted to HMRC or where there is an
under-assessment by HMRC and the taxpayer fails to notify that fact within 30
days of the assessment. Accordingly, Article 2 of the Transitional Order makes
provision for the commencement of the provisions in Schedule 24 relating to
under assessments and states that these come into force on 1 April 2008. This
has potential relevance to that part of the penalties imposed in this case
which relate to the period 09/08. Mr Newington-Bridges submits that as
sections 60 and 61 were repealed on 1st April 2008 in relation to failure
to notify an over-assessment by HMRC by virtue of Article 2 of the Transitional
Order there is no power to levy a penalty in respect of the period 09/08 under
section 61.
13.
Article 3 of the Transitional Order states that notwithstanding Article
2, no person shall be liable to a penalty under Schedule 24 in respect of any
tax period for which a return is required to be made before 1 April 2009.
Article 4 of the Transitional Order provides a saving for sections 60 and 61 of
VATA as follows:
“Notwithstanding paragraph 29(d) of Schedule 24
(consequential amendments), sections 60 and 61 of the Value Added Tax Act
1994(a) (VAT evasion) shall continue to have effect with respect to conduct
involving dishonesty which does not relate to an inaccuracy in a document or a
failure to notify HMRC of an under-assessment by HMRC.”
Mr Newington-Bridges submits that HMRC are in this case
seeking to impose a penalty for failure to notify HMRC of an under-assessment.
Consequently, the saving in Article 4 of the Transitional Order does not apply.
14.
For a number of reasons we reject this submission.
15.
First, HMRC in this case do not rely only on what they allege are
dishonest failures to notify under-assessment. They rely also on the repeated
failure to submit returns at the appropriate time and the use of monies that
Europa should have paid over as VAT in order to fund its business which they
maintained were dishonest acts of omissions. In our view were HMRC able to
make good their case on these grounds then the saving in Article 4 of the
transitional order would apply as these matters do not relate to inaccuracies
in documents or under-assessments. We reject Mr Newington-Bridges’ submission
that where there is also an under-assessment the grounds are conflated and all
the failures should be regarded as a failure to correct under-assessments; in
our view the various grounds can operate independently of each other.
16.
Secondly, even if Mr Newington-Bridges were right and the failures must
be regarded as relating to under-assessments in our view it is not clear that
section 60 and section 61 were actually repealed on 1 April 2008. The
Transitional Order contains no express provision repealing these provisions as
opposed to merely commencing the Schedule 24 provisions on that date and Mr
Newington-Bridges was unable to refer us to a specific provision effecting that
repeal. The implication must therefore be that the provisions remain in force
until penalties under the new provisions are capable of being levied, that is 1
April 2009. We take the view that in the absence of clear language to the
contrary, Parliament must be assumed to have intended to continue the existing
provisions until the new provisions came into effect and not give taxpayers a
year’s “holiday” from dishonesty related penalties concerning inaccurate
documents or under-assessments.
17.
This view is fortified by the provisions of section 17 of the
Interpretation Act 1978. This provides:
“Where an Act repeals a previous enactment and
substitutes provisions for the enactment repealed, the repealed enactment
remains in force until the substituted provisions come into force.”
We accept Mr Singh’s submission that the effect of this
is that when FA 2007 repealed sections 60 and 61 of VATA (assuming that to be
the case) and substituted provisions in Schedule 24 for those sections,
sections 60 and 61 remained in force until the various dates that the
substituted provisions in Schedule 24 came into force.
18.
We have to say that the statutory provisions in this regard are not at
all user friendly to say the least. We cannot understand why they could not
have been clearly set out so that it was absolutely clear what has been
repealed and when and what continues to be in force. We have reached our
conclusion on this point through a process that can be likened to solving a
very difficult jigsaw puzzle when one of the pieces is missing. We therefore
conclude that if HMRC are able to make out their case on the grounds they have
put forward then there is statutory power for any resulting penalty to apply to
the period 08/09.
19.
It is common ground that the standard of proof to be applied is the
usual civil standard; that is the balance of probabilities. As stated by Lady
Hale in paragraph 70 of her speech in Re B [2008] UKHL 35:
“Neither the seriousness of the allegation nor the
seriousness of the consequences should make any difference to the standard of
proof to be applied in determining the facts. The inherent probabilities are
simply something to be taken into account, where relevant, in deciding where
the truth lies.”
20.
HMRC accept in their guidance at VATCEP 2060 that in civil evasion
penalty cases where dishonesty has to be proved extra evidential ingredients
are required because an act involving dishonesty will, in the nature of things,
be impossible of a normal person.
21.
It is also common ground that the test for dishonesty in civil penalty
cases is the same as that in criminal cases. The test was established by Lord Lane in R v Ghosh [1982] 2 QB 1053. In Ghosh Lord Lane held that the
test was a two stage test: the first stage an objective test and the second
stage a subjective test. Lord Lane stated at page 1064:
“In determining whether the prosecution has proved
that the defendant was acting dishonestly, a jury must first of all decide
whether according to the ordinary standards of reasonable and honest people
what was done was dishonest. If it was not dishonest by those standards, this
is the end of the matter and the prosecution fails.
If it was dishonest by those standards, then the
jury must consider whether the defendant himself must have realised that what
he was doing was by those standards dishonest. In most cases, where the
actions are obviously dishonest by ordinary standards, there will be no doubt about
it. It will be obvious that the defendant himself knew that he was acting
dishonestly.”
22.
In the context of civil evasion penalties it has been specifically held
that mere carelessness, even recklessness, does not constitute dishonesty: see
Stuttard v HMRC [2000] STC 342.
23.
The two elements of a penalty under sections 60 and 61 of VATA were the
subject of consideration by the Court of Appeal in R v Dealy [1995] STC
217 where McCowan LJ cited, implicitly with approval, the following direction
on law of His Honour Judge Crabtree to the jury:
“Well, what does ‘evasion’ mean? Evasion is an
English word that means to get out of something. If you evade something, you
get out of its way, you dodge it …
What is dishonesty in English Law? It is a common
English word and it carries its ordinary English meaning. You [the Jury] must
decide for yourselves, first of all, whether ordinary, right-thinking people
would describe what Mr Dealy did as dishonest. If the answer is “No, ordinary,
sensible people would not regard what he did as being dishonest” then he is not
guilty. However, if you decide that ordinary, reasonable people would see his
conduct as dishonest, you must then go on to decide what he thought about it.
If you come to the conclusion that Mr Dealy might have thought, quite honestly,
that he had a perfect right to do as he did, and that no-one would regard it as
dishonest, then he is not guilty. If he was convinced, throughout, that he was
doing the right thing, and that other people would agree with him, that is not
dishonesty.”
24.
We therefore assess the conduct of Europa and Mr and Mrs Walker against
the background of these principles.
Findings of Fact
25.
We had before us various documents relating to the affairs of Europe and two other entities, Hounslow Scaffolding Co Limited and Hounslow Scaffold (a
Partnership) which were associated with Mr and Mrs Walker. The documentation
consisted mainly of correspondence and other documents relating to these
entities’ VAT returns and financial affairs, including notes of meetings and
telephone conversations.
26.
We had witness statements from four HMRC officers, Ms Jane Roberts, Mr
Daniel Pitcher, Mr Gregory Ansell and Mr Roger Reed each of whom gave oral
evidence and were cross-examined. We found all the HMRC officers to be honest
and reliable witnesses, doing their best to recollect events from some years
ago.
27.
Mr and Mrs Walker submitted witness statements. They also gave oral
evidence and were cross-examined. Mr Walker’s evidence was generally
unsatisfactory and in many respects lacked credibility. Mrs Walker’s evidence
was also unsatisfactory in a number of respects and, as we find, is
contradicted by some of the documentary evidence. We have therefore approached
their evidence with caution and have been reluctant generally to accept their
evidence where it is not supported by corroborating written material.
28.
From the documents submitted and the oral evidence we make the following
findings of fact.
29.
Europa carried on business as a construction and scaffolding company.
Mr and Mrs Walker were director and company secretary of Europa respectively
and its sole shareholders, holding one share each. Although Mr and Mrs Walker
maintain that they intended to resign as officers of the company in 2007, it
became common ground, as we find later, that they remained as officers of the
company until it went into administration in 2009. Mr Walker’s primary
responsibility was working on site, managing the day to day business of the
company and dealing with customers and conclusion of contracts. Mrs Walker had
responsibility for Europa’s administration. In that regard a firm of
accountants, Tamsons, were appointed by Europa to prepare Europa’s VAT returns
from paperwork submitted to them by Mrs Walker which were then signed by Mrs
Walker before submission. Europa’s registered office was at Tamsons’ office,
177 Kingsley Road, Hounslow, Middlesex, although Europa’s trading address for
much of the period which is relevant to this appeal was Mr and Mrs Walker’s
home at 53 Wrens Avenue, Ashford, Middlesex (“the Wrens Avenue address”) and
HMRC corresponded with and from time to time made contact or tried to make
contact with Mr and Mrs Walker at that address.
30.
Mr and Mrs Walker have been involved with entities in the scaffolding
business from at least 1985, all of whom have been registered for VAT purposes.
Based on information contained in a recommendation prepared by a Ms J Taylor of
HMRC in January 2006 that Europa should provide security for its VAT
obligations, we find that Mr and Mrs Walker have been associated with the
following entities:
(1)
T R Construction Limited, where Mr Walker was the sole director and Mrs
Walker the company secretary. This company was registered for VAT on 1 July
1985 and went into insolvency proceedings on 29 January 2003 with a debt of
£41,819.36 showed as owing to HMRC. The debt consisted of some returns
submitted without payment and assessments in respect of missing returns. We
have no information as to whether any of this debt was recovered following the
insolvency proceedings.
(2)
Hounslow Scaffold, which was a partnership between Mr and Mrs Walker.
The partnership was registered for VAT on 12 April 1993. Other information not
referred to in Ms Taylor’s recommendation and Mr Walker’s evidence confirms
that this entity ceased trading in 2003 and was wound up on HMRC’s petition on
16 April 2008, HMRC’s petition being based on a debt of £48,397 in respect of
unpaid VAT. Ms Roberts’ recommendation records that the debt consisted of
central assessments being raised for missing returns and that Mrs Walker had
promised to bring the outstanding returns to a meeting arranged for 5 December
2005 but she did not attend. It does not appear that the returns were ever
made or that the outstanding debt was paid.
(3)
Hounslow Scaffold Co Ltd, where Mr and Mrs Walker were the directors and
Mrs Walker the company secretary. This company was registered for VAT on 1
April 2001. At the time of Ms Roberts’ recommendation it had an outstanding
VAT debt of £148,857.79, including surcharges, which consisted of returns
submitted without payment. This company went into voluntary liquidation on 19
July 2006. The company’s statement of affairs as submitted to its statutory
meeting of creditors and which was sworn by Mr Walker showed a debt of £78,775
owed to HMRC in respect of VAT, and an overall deficiency to creditors of
£201,402. Again it does not appear that the outstanding debt was paid.
31.
Mr Newington-Bridges submitted that we should not draw any adverse
inferences concerning Mr & Mrs Walker’s honesty from the VAT history of
these entities as we have no details of when payments were actually made when
the entities were operating. We accept that submission and we do not seek to
infer that Mr and Mrs Walker acted dishonestly in relation to any VAT that
remained unpaid in respect of these entities. We do, however, rely on this
evidence as showing a history of late returns and a lack of compliance as well
as considerable experience of how VAT operates. In particular we find that Mr
and Mrs Walker would have been aware throughout the period that they managed
Europa of the requirement to submit VAT returns and make payments of any VAT
due in a timely fashion. They would also know that surcharges would be payable
in respect of any defaults. Mrs Walker confirmed that she was aware of these
requirements as did Mr Walker, although he denied (which we do not accept) that
he was not aware of the imposition of surcharges where there had been
defaults. In our view any businessman who had been operating in a business
subject to VAT for the length of time that Mr Walker had would be aware of all
of these basic provisions.
32.
Europa was registered for VAT on 1 December 2003. From August 2004
until August 2005 HMRC made unsuccessful attempts to contact Mrs Walker,
through letters and personal visits to the Wrens Avenue address, including an
abortive visit on 18 August 2005 which Mrs Walker had previously been notified
of in a letter dated 27 July 2005 to which she did not respond. HMRC, through
Ms Roberts, wished to discuss the outstanding VAT returns of Europa and
Hounslow Scaffold Co Limited.
33.
A meeting eventually took place on 3 November 2005 at Tamsons’ offices
at which the outstanding returns for the two entities mentioned in paragraph 32
above as well as those for Hounslow Scaffold (the Partnership) were discussed.
Mrs Walker accepted it was her fault that the returns were outstanding because
of “family problems” but stated that the outstanding returns for Europa and
Hounslow Scaffold Co Limited had been completed and were ready for submission
and that those for the Partnership would be completed over the next few weeks.
34.
During the meeting held on 3 November 2005 Mrs Walker gave Ms Roberts
the completed VAT returns for Europa for VAT periods 09/04 to 06/05 and
Hounslow Scaffold Co Ltd for VAT returns periods 02/04 to 05/05. She also
agreed to bring Ms Roberts the outstanding returns for the Partnership, the
outstanding 08/05 return for Hounslow Scaffold Co Limited and the outstanding
09/05 return for Europa on 6 December 2005 but did not turn up for the
scheduled meeting and did not respond to subsequent telephone calls or a letter
dated 15 December 2005 chasing the outstanding information.
35.
We find that Mrs Walker would have been aware that all of these returns
were late. We accept that Mrs Walker was not proactive in progressing Europa’s
VAT affairs; she would provide Tamsons with the necessary evidence and wait for
them to prepare the returns for her signature, and did not appear to be
diligent in chasing them for completed returns for signature. Nevertheless she
knew from her experience of dealing with VAT matters over the years that
returns would not be filed unless she signed them and that they had to be filed
within prescribed deadlines and payments made with the returns. Mrs Walker
accepted in her oral evidence that she knew from the time of the meeting in
November 2005 the importance of putting returns in on time but persisted in
putting them in late and did not deliver the outstanding returns to Ms Roberts
as agreed.
36.
On 12 January 2006 Ms Taylor of HMRC prepared the recommendation that
Europa should be asked for security for its VAT obligations. Mr Ansell’s
evidence was that this was as a consequence of Mr and Mrs Walker’s involvement
in the three entities that had entered insolvency whilst owing significant
amounts of VAT and the failure to submit the VAT returns following Ms Roberts’
investigations. Europa was notified of the requirement to provide security on
23 February 2006 in a letter which was sent both to Tamsons and to the Wrens Avenue address. It and further reminders elicited no response. These letters warned
Europa that if the security requested (£71,023.56) was not provided the company
was liable to prosecution if it continued to make taxable supplies. Mrs Walker
in her evidence confirmed that she did not discuss day to day VAT matters with
Mr Walker but would expect to do so if a problem out of the ordinary arose,
such as a threat of prosecution.
37.
Although no security was provided, the requirement was withdrawn in
January 2007 because of ongoing recovery action which was by then being taken
by HMRC’s Civil Recovery Team in response to unpaid assessments.
38.
Ms Roberts’ review of the late returns that Mrs Walker did provide at
the meeting on 3 November 2005 led her to produce a VAT audit report during the
early part of 2006. She concluded from the returns that had been submitted
that there was an under-assessment by the central assessments that had been
issued in the absence of the returns of approximately £45,700. The report
records that after further chasing the outstanding returns were submitted on 24
April 2006 following action from HMRC’s Debt Management Unit. Ms Roberts’
report concludes as follows:
“Credibility was tested by applying the checks
listed above. We found nothing to cause us to doubt the credibility of the
returns. However, the large difference between the central assessments and
true amount of tax, the lack of response to initial attempts to arrange a visit
and the high number of missing returns show a lack of compliance and I would
recommend an early return visit to this and the associate registration.”
39.
Mr Newington-Bridges put it to both Ms Roberts and Mr Ansell that this
demonstrated that there was no reason to doubt Mr and Mrs Walker’s honesty;
their behaviour at this stage could be characterised as disorganised and
non-compliant but the returns were eventually submitted and where they were
submitted there was no reason to doubt their accuracy. Mr Newington-Bridges
submitted that the conclusion that should be drawn from this is that the
behaviour in eventually submitting accurate returns demonstrated all the
attributes of honest traders.
40.
We do not think this conclusion can readily be drawn from the
conclusions reached by Ms Roberts. As she pointed out in her evidence, her note
was limited to chasing the returns and assessing them when received. She was
not conducting an investigation into whether dishonest evasion was occurring in
the context of the circumstances she was looking at at that time. We therefore
regard Ms Roberts’ conclusions on the credibility of the returns she received
as being entirely neutral on the question of whether Mr and Mrs Walker were
engaged in dishonest evasion in the manner alleged by HMRC.
41.
Mr Ansell, an officer employed in or within the Enforcement and
Compliance Directorate of HMRC, became involved in the VAT affairs of the
entities associated with Mr and Mrs Walker in May 2007. He became involved as
a result of Europa’s registration being highlighted on HMRC’s systems as having
multiple overdue returns. At that stage HMRC’s records showed that none of the
four returns for 2006 had been submitted. Consequently, central assessments
were issued for each of the relevant periods, the amount being calculated as a
best estimate of what might be due at that time, a calculation which is
performed by a central computer which increases the amount assessed as the
periods go on.
42.
Europa paid the sums due for the central assessment and default surcharge
liabilities for VAT periods 03/06 to 03/07 on 31 July 2007 (£48,060.80). This
led Mr Ansell to consider that Europa was exhibiting characteristics suggestive
of evasion because by paying central assessments in preference to rendering VAT
returns Europa had previously and significantly under-declared its tax
liability (as detailed in paragraph 38 above). Mr Ansell therefore decided to
institute an enquiry into Europa’s VAT affairs.
43.
Mr Ansell had difficulty in making contact with Mr and Mrs Walker. He first
attempted to do so by visiting the Wrens Avenue address in September 2007 but
he was told that Mr and Mrs Walker no longer lived there. By this time, as is
common ground, Mr and Mrs Walker had moved to France, sometime in the summer of
2007. Mr Ansell obtained information through HMRC’s missing trader section that
Mr and Mrs Walker were living in France but was unable to obtain their address.
Mr Ansell therefore visited Mr Flora of Tamsons on 27 March 2008. His note of
that visit, which we have no reason to doubt, records that Mr Flora confirmed
that he was expecting to see the Walkers in due course.
44.
Mr Ansell’s visit seems to have prompted some action because on 3 April
2008 the overdue VAT returns for periods 03/06 to 06/07 were received stating a
VAT liability which was £143,566 more than the central assessment amounts which
had been issued in their stead.
45.
We have a copy of Mr Ansell’s case notes which record details of his
numerous telephone contacts with Mr Flora between April and September 2008
during which he was chasing the submission of outstanding returns. These notes
show (and we have no reason to doubt their accuracy) that Mr Flora knew that
the Walkers were in France but he did not know their address. The Walkers contacted
him from time to time and submitted records to him on an ad hoc basis from
which the VAT returns were prepared. Mr Ansell also obtained a mobile number
for Mrs Walker from Mr Flora in August 2008. After a number or attempts to set
up a meeting with Mrs Walker, a meeting did take place on 31 October 2008 at Mr
Ansell’s office which was attended by Mr Ansell and Mr Reed of HMRC, Mrs Walker
and Mr Sivanadarash of Tamsons.
46.
There is a written note of the meeting prepared by Mr Ansell a few days
after the meeting took place from handwritten notes that Mr Ansell took at the
meeting. Mr and Mrs Walker contend that this meeting note is inaccurate in two
important respects. Mr Ansell’s handwritten notes are not a verbatim account
of what was said but, as Mr Ansell explained, were a series of “memory joggers”
to be used in preparing a detailed note after the event.
47.
The first issue arising out of the notes is a number of statements
regarding the current management of Europa. Mr Ansell records Mrs Walker as
having stated that Mr and Mrs Walker:
“are semi-retired – the operation of the business
has been devolved to a “manager”, although they remain the directors of the
company.”
The note also records that “the period of control” by the
manager started approximately one year ago and that “the manager is PAYE and
not a director of the company”. All of these statements are consistent with Mr
Ansell’s handwritten notes.
48.
These statements are clearly in conflict with the evidence given by Mr
and Mrs Walker regarding the arrangements they had made for the running of
Europa’s business when they left for France in the summer of 2007.
49.
Mr Walker’s evidence was that in 2006, through contacts made while
working on an important contract on the tube network in London, he met Mr Sassi
who was working as a site manager on another project. Mr Walker said that he
was impressed with Mr Sassi’s management skills. Some months later Mr Sassi,
who was now running his own business, according to Mr Walker, expressed an
interest in helping run Europa if Mr Walker wished to spend more time abroad.
Mr Walker’s evidence was that Mr Sassi proposed that the office functions of
Europa be moved to his business address in Dorking so he could look after
Europa in tandem with his own business while Mr and Mr Walker retired to France. According to Mr Walker, this arrangement was tried for a period of 6 months and
worked so well that by July 2007 he decided to allow Mr Sassi to take over the
whole of Europa, with Mr Sassi being made a signatory on the bank accounts and what
records Mr and Mrs Walker had being passed to him with any remaining records
staying with Tamsons.
50.
Mr Walker’s evidence was that there was to be no consideration paid at
the time in respect of the sale but Mr Sassi would receive Europa’s goodwill and
whatever money was left in its bank accounts, but Mr Walker made clear to him
that this would only be after collecting outstanding debts and paying any of
Europa’s creditors. If Europa’s business performed as Mr Walker had claimed
then in return Mr Sassi agreed to pay Mr Walker amounts from time to time as a
form of pension. Mr Walker contends that he left signed Companies House forms
with Tamsons recording the resignation of himself and Mrs Walker as officers of
the Company and appointing Mr Sassi in their place and gave Mr Sassi
instructions to visit Tamsons to sign his appointment. This would at the same
time give Mr Sassi an opportunity to introduce himself toTamsons. Thereafter,
Mr Walker envisaged that Tamsons would take care of all the statutory formalities,
as he had always asked them to do in the past.
51.
Mr Walker’s evidence was that early in 2009 he was contacted by Mr Sassi
who informed him that he had received a winding up petition for Europa from
HMRC which was in respect of unpaid VAT and fines. Mr Walker contends that he
did not understand why he was being contacted over Europa’s affairs because the
business was now Mr Sassi’s and he had clearly understood, upon taking over,
what sums of money recovered from debtors was due to creditors, if any – and
should, by this time, have been paid – and what of the remainder was for
Europa.
52.
During the course of his conversation, Mr Walker’s evidence was that Mr
Sassi informed him that Tamsons accountants had closed down so he had changed
the Company’s accountants to a local firm he used for his own business
(Specific Projects Limited), namely C. Swift & Co. of Dorking but did not
state whether or not he had personally attended Tamsons’ offices to take care
of the transfer of officers and other statutory obligations, only that that Mr
Swift had looked at Europa’s books for him. Mr Walker stated that as he had
not been privy to any of Europa’s records since handing the business over to Mr
Sassi in the summer of 2007, he replied that as Europa is now his, Mr Sassi could
do whatever he wished about making such decisions. However, he did say that Europa
had been left with a healthy order book, a good bank balance and a reasonable
sum of money owed so it should have easily been able to meet its commitments.
53.
Mr Walker states that a few days later he discovered that the documents
necessary to transfer the control of the business to Mr Sassi had never been
completed and that Mr and Mrs Walker remained on the register at Companies
House as officers and owners of the business. Consequently he resumed control
of Europa’s affairs and the negotiations with HMRC over the winding up petition,
as described in more detail below.
54.
Mrs Walker’s evidence was to the same effect as Mr Walker’s with regard
to the transfer of responsibilities for Europa to Mr Sassi. Mrs Walker’s
evidence was that when she was contacted by HMRC in 2008 to attend the meeting
which took place on 31 October 2008 she understood this to be a meeting about
tax returns submitted for Europa (and the previous entities with which she had
been involved) during the period they were under hers and Mr Walker’s control.
She said that after the meeting she returned to France leaving Tamsons to
complete any paperwork that might be necessary. Her evidence is that she stopped
off at Europa’s new offices in Dorking and advised Mr Sassi about the meeting
and that she had answered questions about Europa that involved the period
before he took over and that Mr Sassi made no material comment about the
business.
55.
Mrs Walker’s evidence is that after Mr Sassi informed Mr Walker about
the winding up petition in 2009 that it was Mr Sassi who suggested Europa
engage Go-Legal who were situated in the same office block as Europa to
negotiate with HMRC and that it was Mr Sassi who engaged C Swift & Co as
accountants in succession of Tamsons and had control of all of Europa’s books
and records.
56.
With regard to the statements of Mr Ansell’s meeting note regarding the
appointment of a manager, Mrs Walker’s evidence was that the reference was to a
Mr Tony Myatt, who was a scaffolding manager at Europa, who on the basis of Mrs
Walker’s evidence would have been reporting to Mr Sassi rather than to Mr Sassi
himself. Mr Ansell was clear in his evidence that no mention of any particular
manager by name was made, whether it was Mr Sassi or Mr Myatt. At that stage
we accept that he had no knowledge himself of who might be managing Europa
other than Mr and Mrs Walker.
57.
As a consequence it is not surprising that Mr Ansell did not seek to
investigate Mr Sassi’s involvement with Europa at that time. We find, based on
Mr Ansell’s note of the meeting on 31 October 2008, that Mrs Walker had not
disclosed to Mr Ansell any information that might lead him to believe that Mr
Sassi was involved with Europa in any way.
58.
HMRC did make contact with Mr Sassi in 2010, after Europa had gone into
administration and Mr Ansell had received copies of Europa’s bank statements
covering the period from November 2008 to May 2009 from Europa’s
Administrators. Mr Ansell had noted from these statements a payment of
£210,000 had been made to Specific Projects Limited, (“Specific”) of which Mr
Sassi was a director, and following a meeting Mr Ansell had with the
Administrator on 18 February 2010 during which the Administrator had discussed
other payments made to Specific he decided it was necessary to investigate
Specific Projects’ involvement with Europa.
59.
Accordingly Mr Pitcher of HMRC was asked by Mr Ansell in March 2010 to
establish why large sums of money were paid to Specific by Europa shortly
before Europa went into administration.
60.
Mr Pitcher interviewed Mr Sassi on 21 April 2010 at Specific’s offices
at the Atrium, Curtis Road, Dorking, Surrey (“The Atrium address”). We were
shown a hand written note of that interview prepared by Mr Pitcher and a typed
visit report which Mr Pitcher told us was prepared no later than a few days
after the meeting. We have no reason to doubt the accuracy of Mr Pitcher’s
notes and visit report as a true record of what was discussed at the meeting.
61.
Mr Pitcher’s evidence was that Mr Sassi explained that he (Mr Sassi) was
never employed by Europa and made it very clear that he was not involved in the
administration of Europa’s financial affairs, which remained the sole
responsibility of the directors who were based in France. Consequently, Mr
Sassi told Mr Pitcher that he did not realise that Europa was experiencing cash
flow difficulties and had no other knowledge of Europa’s financial records or
status.
62.
Ms Sassi explained to Mr Pitcher that Specific was engaged by Europa to
project manage all works carried out by Europa, including restructuring,
project tenders, marketing, promotions, site management, health and safety and
the preparation of all on site project works.
63.
Mr Sassi provided Mr Pitcher with copies of various invoices covering
some of the work carried out by Specific for Europa and we were shown these.
They describe the services provided which can be summarised as being in the
nature of project management and supervisory services. They are therefore
fully consistent with a contractor/sub-contractor or principal/agency
relationship, that is that Specific were performing Europa’s obligations under
contracts that Europa had entered into, either as a sub-contractor or as
Europa’s agent. They therefore corroborate the explanation Mr Sassi gave to Mr
Pitcher of Specific’s role. There were no written arrangements governing the
relationship between Specific and Europa.
64.
With regard to the payments made by Europa to Specific, at the meeting
it was explained that although Specific commenced work for Europa in November
2006, the first invoice was only issued in September 2007 because Europa had
not yet been paid by its own customers but they were issued at regular
intervals thereafter. Mr Pitcher requested further information from Mr Sassi
after the meeting and on 24 May 2010 Mr Sassi informed Mr Pitcher in an email
that initially Mrs Walker was responsible for sales invoices, and then Specific
took over responsibility but under the instructions of the Directors. With
regard to purchase invoices, Mr Sassi stated that purchase invoices were
checked and passed by Specific Projects and Mr and Mrs Walker authorised all
payments.
65.
Again, this evidence is consistent with Specific having a project
management role, either as a sub-contractor or an agent, acting under the
ultimate supervision of Mr and Mrs Walker and with Specific’s business still
remaining separate from Europa. It is also consistent with what Mr Ansell
records Mrs Walker having said at the meeting of 31 October 2008, namely that
Mr and Mrs Walker were semi-retired but remained as the officer of Europa with
the operations of the business having been devolved to a manager.
66.
Mr Newington-Bridges submits that there is evidence to show that Mr
Sassi’s role went further than this and that Mr Pitcher was misled by Mr Sassi
as to his role. First, Mr Newington-Bridges referred Mr Pitcher to a copy of a
Hire Purchase Agreement entered into in September 2008 between BNP Paribas and
Europa which Mr Sassi had signed on behalf of Europa. Mr Newington-Bridges
submits that this is clear evidence of Mr Sassi administering Europa’s
financial affairs. However, we note that under Mr Sassi’s signature his
position is described as “G Manager” which we take to be shorthand for “General
Manager”. This is therefore consistent with Mr Sassi having a managerial role
reporting to Mr and Mrs Walker and we therefore find that it is more likely
than not that this agreement was signed by Mr Sassi under delegated authority
by either or both of the Walkers. It does not go so far as Mr
Newington-Bridges suggests to show that by the time of this agreement Mr Sassi
was controlling Europa’s financial affairs.
67.
Secondly, Mr Newington-Bridges referred Mr Pitcher to an Electronic
Funds Transfer Customer Authority given on behalf of Europa on 23 March 2009 to
HSBC authorising that bank to transfer £210,000 to Specific. Again, this
authority was signed by Mr Sassi but it did not indicate the capacity in which
he was signing. There is also a hand written note on the authority which
appears as “Auth Tr 23/3/09” which we take to mean that the transfer was
authorised on 23 March 2009. It is unclear whose annotation that was; whether
it was Mr Sassi’s so as to indicate he had authority from the Walkers to make
the transfer, or whether it was made by the HSBC staff member processing the
transaction to indicate that the necessary authority had been obtained. Either
way, it appears that some form of authority beyond Mr Sassi’s signature was
necessary to make the transfer and that being the case in our view it was more
likely than not that such authority would have to have come from one of Mr or
Mrs Walker.
68.
In any event, even if Mr Sassi had authority on his own to authorise a
transfer of this kind it does not indicate that he was administering all the
financial affairs of Europa. It is to be noted that the transfer relates to
operational business matters namely, payment to Europa’s project manager and
therefore relates to the matters over which control had clearly been delegated
to Specific. It says nothing about whether Europa’s general financial
administration and in particular its VAT affairs had been delegated.What it
does indicate is that, consistent with Mr and Mrs Walker’s evidence, Mr Sassi
had been made a signatory to one of Europa’s bank accounts. It also appears
that this was not disclosed by Mr Sassi to Mr Pitcher although it is not clear
that Mr Sassi was specifically asked whether he had any authority over Europa’s
bank accounts. Mr Newington-Bridges submits that in view of this authority Mr
Sassi’s statement to Mr Pitcher that he was “not involved in financial
administration for Europa which was the sole responsibility of the directors
who were based in France” was untrue, although it is possible that Mr Sassi was
drawing a distinction in his own mind between operating the business on a day
to day basis as project manager and dealing with back-office administration
such as submitting VAT returns. We can therefore draw no conclusion that the
signed authority shows, first that Mr Sassi was a director of Europa or
secondly that he was responsible for all of Europa’s financial administration.
It is of course entirely possible for a person to be given authority over a
company’s bank account without being made a director.
69.
There are two further pieces of evidence that Mr Newington-Bridges
relies on to corroborate Mr and Mrs Walker’s evidence regarding the role of Mr
Sassi.
70.
First, there is the fact that the principal place of business of Europa
was changed to The Atrium address. It is not clear whether the registered
office was changed (the Annual Return of Europa that Mrs Walker signed in
September 2008 which is mentioned below shows the registered office as still
being Tamsons’ address in Hounslow) but when details of The Atrium address were
given to Mr Ansell at the meeting on 31 October 2008 by Mrs Walker Mr Ansell
arranged for Europa’s principal place of business for VAT records purposes to
be changed to the Atrium address from the Wrens Avenue address. We see nothing
in this that gives further support to Mr Newington-Bridges’ submission. As
Europa’s operations on a day to day basis were being carried on by Specific
which was based at The Atrium it is not surprising that this address should replace
the Wrens Avenue address. After the meeting on 31 October 2008 Mrs Walker also
gave authority for HMRC to correspond with Tamsons at the Hounslow address,
specifically with regard to Europa’s VAT affairs, so we do not see that the
change of address for Europa’s day to day business operations demonstrates that
all Europa’s financial matters were being dealt with under Mr Sassi’s control
from that office as well.
71.
Secondly, there is correspondence between the Insolvency Service and Mr
Sassi in 2010 regarding his involvement with Europa. In its letter of 22
November 2010 the Insolvency Service concluded:
“although you were not formally appointed as a
director of [Europa], it would appear that you acted in the capacity of a
director of it, in that you were involved in its general management and
control, operating in a similar capacity as the formally appointed director.”
72.
Subsequently, on 8 February 2011 the Insolvency Service notified Mr
Sassi by letter that the Secretary of State intended to apply to the Court for
an order disqualifying Mr Sassi (as well as Mr and Mrs Walker) from acting as a
company director based upon his conduct as a director of Europa. Amongst the
conduct highlighted was the failure to determine Europa’s correct VAT
liabilities.
73.
We do not know the basis on which the Insolvency Service concluded that
Mr Sassi was a director, although the passage we have quoted from their letter
of 22 November 2010 indicates that they found him to be involved in the
company’s “general management and control” rather than that he was involved in
all Europa’s affairs. The fact that he was held responsible for the VAT
failings is the inevitable consequence of him being found to be a director
regardless of whether in practice he actually had any involvement in Europa’s
VAT affairs. Nevertheless, even if Mr Sassi was a director that does not
absolve Mr and Mrs Walker for responsibility if they remained officers (which
the Insolvency Service clearly believed to be the case) and therefore
potentially liable to penalties under sections 60 and 61 of VATA if they acted
dishonestly. It is therefore still necessary to establish the extent to which
Mr and Mrs Walker continued to have responsibility for Europa’s VAT affairs
even if, and in our view the evidence before us does not clearly establish it
to be the case, that Mr Sassi is to be treated as a director of Europa.
74.
In our view the evidence points overwhelmingly to the conclusion that Mr
and Mrs Walker remained the owners of Europa and as its sole director and company
secretary respectively, with ongoing responsibility for its financial
administration, including its VAT affairs, up to the point that Europa went
into administration. Our reasons for this conclusion are as follows.
75.
First, Mr Ansell’s notes of the meeting held on 31 October 2008 do not
record Mrs Walker saying anything about the fact that complete responsibility
for the ownership and management of Europa had passed to Mr Sassi. Mrs
Walker’s evidence was that she understood the meeting was to be a meeting about
Europa and the previous entities with whom the Walkers had been involved during
the period these entities were under her control. Mr Ansell was clear in his
evidence that this was not the case and that the meeting was arranged to
discuss the VAT affairs of the various entities generally without limitation as
to period. We accept Mr Ansell’s evidence on this point and reject Mrs
Walker’s explanation. If Mrs Walker was clear that she had no responsibility
for the period after she had moved to France it would have been in her interest
to make that absolutely clear to Mr Ansell either when she agreed to attend the
meeting or at the very latest at the outset of the meeting. It was clear that
she did not do that and that Mr Ansell was given no details of who was managing
the company. We find that Mr Ansell was told that there was a manager in place
and although he was not named the person referred to by Mrs Walker was Mr Sassi
(not Mr Myatt as alleged by Mrs Walker) and that Mr Ansell was correct when he
recorded that Mr and Mrs Walker were “semi-retired but remained the officers of
Europa”. This is consistent with the evidence regarding Mr Sassi’s role
obtained by Mr Pitcher and the underlying documentation we reviewed in
paragraphs 58 to 67 above.
76.
Secondly, we reject Mr and Mrs Walker’s evidence that completed
Companies House forms were left by them at Tamsons’ office resigning as
officers and appointing Mr Sassi and that they arranged for Mr Sassi to attend
at Tamsons’ office to sign the necessary documentation. Mrs Walker accepted
that she signed an Annual Return (Form 363s) for Europa on 28 September 2008.
The form showed the registered office to be at Tamsons’ office in Kingsley Road, Hounslow and that Mr and Mrs Walker were the sole director and secretary
respectively and also the sole shareholders. If Mr and Mrs Walker were right
about ownership and management having passed to Mr Sassi we find it implausible
that she would be signing, in her capacity as company secretary, a document
which states the opposite of what she believed to be the position since she
moved to France. We do not accept her explanation that she merely signed what
the accountants asked her to sign without examining it. She would be familiar
with the contents of an Annual Return Form from many years experience and it is
inconceivable that she was not aware that she was being asked to sign it as an
officer of the company. Had she believed that ownership and management was now
Mr Sassi’s responsibility it is not credible that she would not have questioned
why she as being asked to sign this form when according to her evidence forms
to record her resignation had been deposited with Tamsons over a year ago.
77.
Mr and Mrs Walker did not provide any evidence that suggested they had
actually transferred their shareholdings to Mr Sassi. Mr Walker’s evidence on
this point lacked any credibility. He accepted that at the time of the alleged
transfer Europa’s net asses were relatively healthy, amounting to some £600,000
in total. Mr Walker’s evidence therefore was to the effect that he and Mrs
Walker transferred the benefit of such assets without payment but on the basis
of a verbal assurance from a person, Mr Sassi, who he had only known and worked
with for a short period that he would be paid a pension for life as and when
Europa could afford it. Mr Walker sought to explain a payment of £15,000 that
was made to him in March 2009 as monies due in respect of the pension
agreement. In our view it is more likely to be a payment to Mr Walker in his
capacity as a continuing director of the company and therefore was received as
director’s remuneration. We think that it is inconceivable that Mr and Mrs
Walker would have transferred what was on his evidence a valuable business on
this basis and therefore reject their evidence that ownership of Europa was
transferred to Mr Sassi in any respect.
78.
Thirdly, Mr Walker’s evidence was that Mr Sassi contacted him when the
winding-up petition against Europa was received in early 2009. We see no
reason why Mr Sassi would make contact with Mr Walker at that point if Mr Sassi
had sole responsibility for dealing with Europa’s affairs and we find that the
reason Mr Sassi did contact Mr Walker was because Mr Walker remained
responsible as the sole director. It is also telling that Mr Walker appears to
have made no effort to implement the arrangements for Mr Sassi to take over as
sole director after he learned, on his evidence, that Mr Sassi had not visited
Tamsons to complete the formalities to transfer responsibility to Europa to
him. He appears to have accepted the situation without demur and then dealt
with the winding-up petition and the negotiations over it representing himself
to be the sole director of Europa. This is apparent from the letter that Go
Legal, who were acting as Europa’s solicitors, wrote to HMRC on 19 March 2009
putting forward proposals to pay the outstanding VAT debt over a period of time
in return for withdrawal of the petition. This letter bore a statement at its
foot by Mr Walker confirming that he agreed with the proposal in his capacity
as sole director of Europa. In our view the reason Mr Walker did not challenge
Mr Sassi over his failure to take over the directorship and represented himself
as sole director in the Go Legal letter was that he had always remained as the
sole director and knew that to be the case. We reject Mr Walker’s evidence
that he did not know who the directors of Europa were after the winding-up
petition was presented and he took control of the situation because he knew it
was his responsibility to do so.
79.
Fourthly, Mrs Walker agreed, as recorded in Mr Ansell’s note of the
meeting held on 31 October 2008, to submit five outstanding VAT returns by 7
November 2008. In the event, Mrs Walker did submit three of the outstanding
returns on 18 November 2008 and another return on 12 December 2008. Mrs Walker
signed all of the relevant returns, even those that related to the period after
she had left for France. Had she believed that Mr Sassi had responsibility for
the relevant returns and had all the books and records relating thereto and had
she believed that she stated in her evidence, which was that she believed the
meeting with Mr Ansell was to discuss only matters which occurred when the VAT
affairs of Europa were under her control, she would have asked Mr Sassi to deal
with these returns. She did not, and her evidence was that she only had a brief
meeting with Mr Sassi after the meeting with Mr Ansell and did not discuss
Europa’s affairs in any detail. We find that the previous arrangements for the
completion of the returns continued to apply, that is Mrs Walker gave Tamsons
all the relevant records and Tamsons prepared the returns for Mrs Walker’s
signature. This explains why the returns were completed relatively quickly
after the meeting on 31 October 2008; Tamsons clearly were able to prepare them
without any assistance from Mr Sassi.
80.
We therefore reject Mr and Mrs Walker’s evidence that they had ceased to
have responsibility for Europa’s financial affairs and in particular
responsibility for its VAT affairs or that they passed the relevant books and
records to Mr Sassi.
81.
It is clear that at some point after the meeting on 31 October 2008
Tamsons were replaced as Europa’s accountants by Mr Swift. Mr Ansell was made
aware of this in a telephone call he held with Mr Harvic of Go Legal on 26
January 2009, in a call in which Mr Harvic indicated that he was going to
review the books and records of Europa before they would be made available, as
requested by Mr Ansell, to HMRC. There is no evidence, however, despite Mr
Swift also being Mr Sassi’s accountant, that this indicated any transfer of the
responsibilities for Europa’s VAT affairs to Mr Sassi. Indeed the record we
were shown of Mr Ansell’s conversation with Mr Swift clearly indicated that the
Walkers continued to have responsibility. Mr Ansell’s note of a telephone
conversation he had with Mr Swift on 10 December 2010 at a time when Mr Ansell
was still trying to locate the books and records of Europa indicated that Mr
and Mrs Walker had given him some records; he made no reference to receiving
any information from Mr Sassi. In addition, as we have found, Mr Walker took
responsibility for dealing with the winding-up petition, advised by Go Legal.
82.
We therefore find that responsibility for Europa’s VAT affairs remained
with Mr and Mrs Walker up to the point that Europa went into administration in
2009.
83.
The second issue arising out of the notes of the meeting held on 31
October 2008 are the following confirmations that Mr Ansell records Mrs Walker
as having given:
“- that the reason the debt on file is so large
is because of payment issues with several major clients …
-
that as a result where payment of
VAT was received it was put to other uses by the business – specifically:
a. Payment of wages – Prime – including Mr and Mrs
Walkers salary (n.b. 1 year ago they affected a move to ‘dividends only’
drawings and have taken a dividend since being in France)
b. Payment of
overheads and suppliers – There are no significant creditors as the business is
a good payer;
That as a result the VAT
was knowingly not paid to HMRC when due.”
84.
Mr Ansell’s handwritten “memory jogger” from which these notes were
prepared records the phrase “VAT gone on costs”. The references to the various
items which he records the VAT having been spent on appear in a different part
of his note to this statement. Mr Newington-Bridges put it to Mr Ansell that
what was meant by this phrase was that with costs of Europa’s business
escalating the VAT inputs it was receiving were getting close to the output tax
it was due to pay HMRC, and not that the VAT that should have been accounted
for to HMRC was being used to defray other business expenses.
85.
We reject this submission. First, it is clear from the VAT returns in
question that the VAT claimed as inputs does not reach a point at which they
match the outputs. In any event, Mrs Walker accepted in cross-examination,
contrary to her witness statement, that the type written note of the meeting
was accurate when it recorded that monies were used to pay other debts and
outgoings, rather than earmarking it for payment of VAT debts. In particular,
Mrs Walker accepted that there were times when due to cash flow difficulties
payments needed to be made to third parties so that payments to third parties
would be made at times when sums payable to HMRC for VAT were overdue, although
she stressed that it was never her intention not to pay the VAT that was due,
and it would be paid when money was available.
86.
We therefore accept Mr Ansell’s typed written note as an accurate record
of what Mrs Walker said at the meeting on 31 October 2008 on this point. It is
also corroborated by Mr Reed, who was present at the meeting and confirmed that
in his view it was correct, although he had no notes of his own.
87.
We infer from Europa’s approach to the payment of VAT and the submission
of VAT returns in respect of the periods relevant to these appeals that its
strategy, as confirmed by the remarks that Mrs Walker made at the meeting on 31
October 2008, was to pay its VAT liabilities when it had cash available to do
so and where it had cash available to meet other liabilities and those
liabilities were due it would make those payments even where it knew that sums
in respect of VAT would be due and payable to HMRC.
88.
In that regard, we find the following facts with respect to Mr and Mrs
Walker’s knowledge of the VAT system and how it operates and the state of
Europa’s business at the time the relevant VAT returns were filed and payments
of VAT made.
89.
Mrs Walker confirmed in her oral evidence that she was aware of her
responsibilities to ensure that VAT returns and payments due in respect of
those returns were made on time and that if there was a failure to comply the
trader would be in default and would fall into the default surcharge regime. This
was based on her experience of dealing with VAT registered entities over a
period of more than 25 years, a number of which, including T R Construction
Limited, Hounslow Scaffold, Hounslow Scaffold Co Limited as well as Europa
itself, fell into default.
90.
Mrs Walker admitted that she was not proactive in responding to HMRC’s
requests for information. Mrs Walker accepted that every VAT return filed by
Europa was late except for the first one. We accept that Mrs Walker’s approach
was to provide Tamsons with all the necessary invoices and other documentation
to enable Tamsons to prepare the returns for Mrs Walker’s signature. Mrs
Walker maintains that she relied entirely on Tamsons work to satisfy herself
that the figures prepared were accurate and what payment would be required in
respect of the returns and would not seek to verify the figures herself.
91.
With regard to the periods in respect of which the penalties have been
assessed on Mr and Mrs Walker, HMRC’s records show the following:
(1)
By July 2007 Europa had a VAT debt due of £48,060.80, although this
understates the true debt as it was based on central assessments and subsequent
to the submission of the missing VAT returns after the meeting on 31 October
2008 it was clear that the debt owed was much higher;
(2)
On 3 July 2007 HMRC’s civil recovery unit wrote to Europa at Tamsons’
address notifying them that if the debt referred to above was not paid within 7
days a petition to wind-up Europa would be presented;
(3)
On 31 July 2007 a payment sent by Tamsons for the outstanding debt was
cleared which resulted in a nil balance on HMRC’s books;
(4)
On 8 January 2008 Europa was notified that VAT of £32,160.90 was due,
warning it that proceedings would be instituted in the County Court if it was
not paid within 7 days. Again this sum understated the true debt as it was
based on central assessments rather than Europa’s own VAT returns;
(5)
This debt of £32,160.90 was paid on 2 April 2008;
(6)
The last VAT payment made by Europa was in January 2009 when it made a
payment of £100,000 on account of its outstanding liabilities. After the
winding-up petition was presented in March 2009 as referred to in paragraph 51 above
Go Legal had offered to make various stage payments towards clearing the outstanding
debt in an attempt to obtain agreement to the petition being withdrawn but it
does not appear that any payments were made;
(7)
In respect of each of the periods in question, a central assessment was
issued in the absence of a return from Europa. In respect of all but three of
the periods the central assessments were substantially less than the true
amount of VAT due, based on Europa’s own assessment. In respect of three
periods the central assessments were in relatively small amounts higher than the
amount shown on Europa’s own returns. Consequently, the amount which became
due as a result of the reconciliation of the amounts assessed under the central
assessments to the amount shown on Europa’s return when submitted was
£223,299.54;
(8)
When Europa did make payments it did so by reference to the amounts shown
on the central assessments; and
(9)
Each central assessment when issued (on Form VAT 152) contained a
prominent statement on its face as follows:
“If this tax assessment understates your liability
and you do not draw this to the Commissioners’ attention within 30 days you may
become liable to a financial Penalty and Default Interest. You are advised to
render your return without delay. Please see the notes overleaf.”
The notes referred to in this statement
provided, inter alia:
“The Commissioners are empowered to make an
additional assessment if it is discovered that the amount of tax you have paid
is less than the true amount due.
You may become liable to a misdeclaration penalty if
you fail to tell Customs and Excise within 30 days that this assessment of tax
is too low.
If you are found to have dishonestly evaded VAT you
may be liable to a Civil Evasion Penalty equal to the amount of VAT evaded.”
92.
Mrs Walker confirmed in her oral evidence that she was aware of Europa’s
turnover as she issued the company’s sales invoices. She also confirmed that
she was aware of the applicable rate of VAT applicable to the price shown on
the invoice and therefore would have been roughly aware of the amount of VAT that
would become due in respect of its sales. Mr Singh therefore put it to Mrs
Walker that at the time the payment of £48,060.80 was made on 31 July 2007 she
would have known that at the relevant time, based on its turnover, that Europa
owed significantly more than this and that paying only this sum in respect of a
15 month period of trading amounted to a serious underpayment, the true
liability at the time being four times that amount. Mrs Walker initially
denied this and also maintained that she was unaware of the wording on the
central assessments quoted in paragraph 91(9) above and therefore did nothing
to draw the underpayment to HMRC’s attention. She also maintains that she made
such payments as she was advised by Tamsons to make.
93.
Eventually, Mrs Walker conceded that the payment on 31 July 2007 was
made in the context of her move to France and her instructions to Tamsons were
to bring Europa’s VAT position up to date and pay what was then due, so that
she would have known that the payment actually made would amount to a serious
underpayment.
94.
We also find that Mrs Walker would have been aware of the wording on the
central assessments and the relevant notes, based on her long experience of
dealing with VAT affairs. We do not accept her assertions that she relied
entirely on the accountants and never read any of the material she was asked to
sign or questioned how much needed to be paid. Mrs Walker admitted that cash
flow was always a problem for Europa so she would be keen to know what
liabilities Europa would need to settle and that the amounts she was being
asked to pay were correct.
95.
Although there was evidence that Tamsons were not particularly proactive
in taking the initiative to deal with Europa’s affairs, we find that there was
a deliberate strategy not to pay VAT until the last minute, as shown by the
fact that the payments made in July 2007 and April 2008 were only made under
threat of legal action, in the first case under the threat of a winding-up
order.
96.
Mr Newington-Bridges submitted that Mrs Walker’s behaviour was
consistent with that shown in respect of the earlier period following Ms
Roberts’ intervention, that is there was a history of late returns and a lack
of compliance but all returns were eventually submitted, and there was nothing
to impugn the credibility of those returns. The failures were therefore down to
inefficiency or at worst recklessness, rather than a deliberate course of
conduct. We reject those submissions. The combination of the fact that Mrs
Walker admitted that VAT was paid when resources were available but in the
meantime sums due may be used to defray other costs, the history of only making
payments when legal action was threatened and paying against central
assessments when to her knowledge the actual liability would have been much
higher, lead us to conclude that the failure to submit returns and only pay the
amount shown on the central assessments, shows a clear pattern of deliberate
behaviour and cannot be characterised as mere inefficiency and disorganisation or
even recklessness.
97.
With regard to Mr Walker, he denied even basic knowledge of Europa’s VAT
affairs. Whilst he accepted that he knew that there was a requirement to file
VAT returns and pay VAT on time, he denied that he knew there would be a
default surcharge if payments were not made on time, or that all of the
entities with which he had been associated were subject to such surcharges. He
denied that he ever knew that Europa’s returns were not made on time and denied
looking at any correspondence that was sent to him regarding Europa’s VAT
affairs. Although Mr Walker admitted that monies received in respect of sales
invoices and which included sums payable in respect of VAT could be used to
defray Europa’s expenses he denied that he would have known that was the case.
He admitted that using monies due in respect of overdue VAT for other purposes
was wrong but did not accept that it was dishonest. He also denied all
knowledge of the central assessments and that payments were made against them.
Mr Walker also admitted that he had a rough idea of Europa’s turnover and was
aware that VAT was a percentage of the price of each sale, but, implausibly,
denied that because of this he would have known roughly the amount of VAT owed
in respect of Europa’s turnover. He asserted he did not have this knowledge
because he had nothing to do with Europa’s books.
98.
We reject Mr Walker’s evidence on these points as being inherently
implausible. He was responsible for the commercial side of Europa’s business
and negotiating its contracts and agreeing appropriate prices to ensure that
Europa was profitable. Whilst we accept he did not have day to day conduct for
them he would have needed to discuss Europa’s financial affairs with Mrs Walker
from time to time in order to ensure that the contracts he was concluding would
generate sufficient cash flow to meet Europa’s liabilities. Mrs Walker
confirmed that she would have discussed significant matters concerning Europa’s
VAT affairs with Mr Walker, particularly if there was a threat of prosecution.
Therefore it is more likely than not that she discussed the correspondence
regarding the request for security in early 2007, and would have discussed the
fact that Europa was threatened with legal action in respect of overdue
payments, including the threat of a winding-up order in 2008.
99.
As a result of these discussions, his knowledge of Europa’s turnover
and the amount represented by sales invoices that would have to be accounted
for in respect of VAT, his experience of being an officer of VAT registered
companies for over 25 years, whilst not necessarily being aware of the precise
figures owing Mr Walker would have known that Europa was consistently late with
its VAT returns and its VAT payments. He would therefore also have known that
the amounts being paid amounted to serious underpayments. We find that as sole
director in a small business he would have been fully aware of the strategy
adopted by Europa which was only to submit VAT returns and make payments (to
the minimum amount possible) when put under pressure by HMRC to do so with a
threat of legal action.
100. We need not deal
in detail with the events that followed the submission of the VAT returns
requested following the meeting on 31 October 2008. We note that the return
for 12/08 was never submitted. As mentioned above, there were attempts through
Go Legal to negotiate a settlement of HMRC’s action to wind-up Europa which
were unsuccessful. Mr Ansell made unsuccessful attempts to obtain access to
the books and records of Europa during 2009 and the early part of 2010.
Europa’s administrators indicated to Mr Ansell that all formal requests to Mr
Walker for these books and records were ignored by Mr Walker and the
Administrators did not intend to incur costs in taking enforcement action.
101. Accordingly, Mr
Ansell focused his attention on pursuing civil penalty proceedings against Mr
and Mrs Walker. Mr and Mrs Walker were unco-operative in meeting Mr Ansell to
discuss this process, his first request for a meeting being in May 2009 and
although a meeting was arranged for 6 October 2009 it did not go ahead and a
statement promised by Go Legal from Mr and Mrs Walker as to their explanation
of the reasons for the delay in submitting VAT returns and making VAT payments
late did not materialise.
102. Mr Ansell
prepared a report in July 2010 recommending that a penalty under section 60 of
VATA should be imposed on Europa and specifically on the officers under section
61 of VATA. This recommendation was accepted, subject to a small amendment to
the mitigation levels. The penalty was calculated by reference to the amounts
of VAT underpaid in respect of the periods 03/06 to 09/08, namely £228,491
which after mitigation of 15% resulted in a penalty of £194,214 divided equally
between Mr and Mrs Walker.
103. The imposition
of this penalty was upheld on review following which Mr and Mrs Walker appealed
to this Tribunal.
104. We can therefore
summarise our principal findings of facts as follows:
(1)
Mr and Mrs Walker have been involved for a period of over 25 years with
various VAT registered entities providing construction and scaffolding
services, the most recent of which was Europa, which traded from 2003 until going
into administration in 2009;
(2)
Through this experience, Mr and Mrs Walker were fully aware of the need to
submit VAT returns and make VAT payments on time and that surcharges would be
payable in respect of defaults in that regard;
(3)
All the VAT registered entities with which Mr and Mrs Walker were
involved in this sector were consistently late with their returns and making
VAT payments;
(4)
HMRC chased Mrs Walker for late returns in 2005 which were eventually
submitted. This pattern of behaviour persisted even after Europa were
threatened with imposition of a requirement to provide security for its VAT
obligations;
(5)
HMRC through Mr Ansell made contact with the Walkers because of concerns
that the pattern of consistently late returns and making payments against
central assessments suggested possible evasion;
(6)
Mr Ansell after many attempts eventually met Mrs Walker to discuss
Europa’s VAT affairs on 31 October 2008. At that meeting Mrs Walker disclosed
that she and her husband were semi-retired and living in France but remained as Europa’s officers with the operation of the business being devolved
to an (unnamed) manager;
(7)
Contrary to Mr and Mrs Walker’s evidence the ownership of Europa was not
transferred to Mr Sassi (the manager who was referred to but not named at the
meeting of 31 October 2008) when Mr and Mrs Walker left for France in the summer of 2007 and neither was Mr Sassi formally appointed as a director. Mr and Mrs
Walker remained as sole directors and company secretary respectively and
retained responsibility for Europa’s financial affairs, and in particular its
VAT returns and payments;
(8)
Mrs Walker confirmed at the meeting held on 31 October 2008 and in her
oral evidence that when payments were received for VAT they were put to other
uses where necessary with the result that VAT was knowingly not paid to HMRC
when due, although Mrs Walker denied that this was dishonest;
(9)
Although Mrs Walker had delegated responsibility for the preparation of
VAT returns to Tamsons on the basis of information she provided to them both
she and Mr Walker was aware of in rough terms of Europa’s VAT liability in
respect of each period. Europa’s strategy with regard to VAT as known to both
Mr and Mrs Walker was to make no payments unless threatened with legal action
and to make payments against central assessments when knowing that those
assessments understated Europa’s true liability at the relevant time;
(10) We find
that this was a deliberate strategy and reject the submission that the
behaviour demonstrates no more than gross inefficiency, or at worst,
recklessness; and
(11) There was
no substantial co-operation with HMRC’s investigation after the meeting on 31
October 2008 other than to submit some of the overdue returns.
Discussion
105. As is apparent
from the provisions of sections 60 and 61 of VATA there is a two stage approach
to be followed in order to determine whether or not Mr and Mrs Walker are
liable for a penalty under section 61. First, we have to determine whether
Europa’s conduct involves dishonesty, as provided in Section 60(1). Secondly,
if we find that to be the case we have to determine whether the conduct on
Europa’s part which is found to be dishonest can be attributed, in whole or in
part, to the dishonesty of Mr and Mrs Walker who, we have found, were at all
material times “named officers” of Europa for the purposes of section 61 of
VATA.
106. In fact, as we
have found that at all material times Mr and Mrs Walker remained responsible
for Europa’s VAT affairs, notwithstanding the management of its operations by
Mr Sassi after the summer of 2007 and the involvement of Tamsons in the
preparation of the returns, it is only if we find either of Mr and Mrs Walker’s
behaviour to be dishonest that Europa could be held to be dishonest on the
basis that they were the only persons through whom Europa acted in relation to
its VAT affairs. Therefore, if we find any of the behaviours of Mr and Mrs
Walker to be in relation to Europa’s VAT affairs to be dishonest then it
follows that Europa should be determined to be dishonest in that regard and it
consequently follows that for the purposes of section 61 VATA Europa’s
dishonesty would be attributable to the conduct of either or both of Mr and Mrs
Walker, as the case may be.
107. It is also
necessary for us to determine whether the relevant acts or omissions of Europa
were for the purpose of evading VAT (see section 60(1) (a) VATA).
108. In our view
there are three aspects of Europa’s behaviour which we have found as facts that
fall to be considered in the context of dishonesty and evasion:
(1)
the failure to submit any of the VAT returns for the periods in question
on time as a consequence of a deliberate decision, to which both Mr and Mrs
Walker were a party, not to submit returns unless pressed by HMRC;
(2)
the failure to draw HMRC’s attention to the fact that most of the
central assessments made for the periods in question significantly under-stated
Europa’s VAT liability and the practice of making payments only up to the
amount of the central assessments and then only under the threat of legal
action when both Mr and Mrs Walker knew that the amounts paid were
significantly less than the true amount of VAT which was overdue; and
(3)
the payment of other creditors in preference to settling its VAT
liabilities at a time when Mr and Mrs Walker knew that Europa’s VAT liabilities
were overdue for payment.
As we have found, these matters
occurred as a result of a deliberate strategy not to pay Europa’s true VAT
liabilities unless and until threatened by legal action, and in particular, a
winding-up order.
109. Mr
Newington-Bridges submitted that these failures were due to carelessness, even
recklessness but they do not show dishonesty. We have rejected the submission
that the behaviour can be regarded as careless or reckless. In our view the
evidence that the behaviour was deliberate is cogent and compelling, based as
it is on the Walkers’ knowledge of how VAT operates, the knowledge of the
turnover of the business, the fact that the amounts paid for VAT were usually
well below the amounts of the central assessments, the fact that returns and
payments were never made unless pressure was brought to bear, and Mrs Walker’s
admission at the meeting of 31 October 2008 and her oral evidence.
110. Mr
Newington-Bridges submits that the offer to pay all outstanding VAT in Go
Legal’s letter of 19 March 2009 which he characterises as a “relatively early
stage” in these proceedings goes to the fundamental honesty of Europa. This,
he submits, shows that Mr and Mrs Walker made an offer to pay all of the VAT
outstanding more than 18 months before the civil evasion penalties were
imposed. This offer consisted of a lump sum of £75,000 in addition to the lump
sum of £100,000 which had already been paid to HMRC in January 2009 and monthly
payments of £20,000 until the debt was cleared, but the offer was rejected
because HMRC would only accept an offer that paid off the debt in full. Mr
Newington-Bridges submits that the offer is strong evidence of the honest
approach that Europa took to these matters from an early stage.
111. With regard to
the alleged personal dishonesty of Mr and Mrs Walker, Mr Newington-Bridges
submits that the accountancy function was entirely outsourced to Tamsons with
the relevant paperwork being collated by Mrs Walker and provided to Tamsons.
The misfeasance of Tamsons cannot mean that Mr and Mrs Walker can be held to be
dishonest. The evidence in totality on which Mr Ansell based his decision to
impose penalties points to a history of non-compliance and failure to attend interviews
over the years but is not sufficient to demonstrate (the burden being on HMRC)
that the failure to correct under-assessments for 8 specific VAT returns was
the result of personal dishonesty.
112. Before dealing
with these submissions, we shall deal first with the question of evasion. It
is clear that mere negligent or reckless acts will not suffice in this context;
there must be intent on the part of the person concerned to evade VAT. On the
basis of our findings of fact as to a deliberate strategy on the part of Mr and
Mrs Walker it is inevitable that we conclude that there was intent in this
case. The question that arises is whether if the intent was only to delay the
payment of the correct amount of VAT until pressed whether that was sufficient
to amount to evasion, where (as contended by Mrs Walker) there was always an
intention to pay the overdue VAT when funds were available. We have no
hesitation in finding that such a strategy amounts to evasion. We find,
consistent with McCowan LJ’s reasoning in Dealy, quoted in paragraph 23
above, that by deliberately delaying the correct payment until pressed Europa
was dodging its responsibilities and getting out of the way of performing its
obligations in a timely fashion.
113. We reject Mr
Newington-Bridges submission that the offer contained in Go Legal’s letter of
19 March 2009 demonstrates honest behaviour. It is a travesty to describe this
letter as being sent at a “relatively early stage in the process”. It may be
that Mr Ansell had only just then focused his efforts on the question of civil
penalty proceedings against the Walkers rather than pursuing the outstanding
corporate matter, but this letter followed a long period of deliberate evasion
of responsibility on the part of the Walkers in their capacity as officers of
Europa. The offer is consistent with the strategy that we have found they
followed which was only to engage with HMRC when legal proceedings are threatened
but goes no further than that.
114. We also reject
Mr Newington-Bridges’ submission that responsibility must be laid at the feet
of Tamsons. Our findings were that Tamsons, although not proactive, were
dependent on Mrs Walker instructing them to prepare the necessary returns which
clearly they could only do on the basis of co-operation from her in the form of
providing the necessary documentation and then it was the responsibility of Mrs
Walker to review the completed returns and sign and submit them. As we have
found, she did so in full knowledge that the amounts declared on the returns
was in most cases well in excess of the central assessments that had previously
been received.
115. We therefore
turn to the question as to whether Mr and Mrs Walker’s behaviour can be
characterised as dishonest. As we have identified in paragraph 21 above, on the
authority of Ghosh, this is a two stage test.
116. First we have to
determine whether according to the ordinary standards of reasonable and honest
people what was done was dishonest. We have no hesitation in finding that it
was. It was contended by Mrs Walker that there was always an intention to pay
the VAT eventually when resources allowed and no intention to deprive HMRC of
the monies due permanently, and therefore she did not regard herself as
dishonest. We reject that contention; the behaviour would be dishonest even if
there was no intent to deprive HMRC of the sums due permanently. The fact is
that underpayments were made at a time when Mr and Mrs Walker both knew that to
be the case. That is not the behaviour of an honest trader. Neither is it
honest to delay submitting returns deliberately until pressure is brought by
HMRC. Neither is it honest to prefer other creditors with payment always to be
made to HMRC at the end of the queue. An honest trader faced with financial
difficulties such that he did not have sufficient resources to pay all his due
debts would be open and transparent with HMRC and his other creditors and try
to negotiate a solution. It was the strategy of Mr and Mrs Walker to do the
complete opposite.
117. Secondly, we
have to determine whether Mr and Mrs Walker must have realised that what they
were doing was dishonest. Did they think, quite honestly, to echo McCowan LJ’s
words in Dealy, that they had the perfect right to do what they did and
nobody would regard it as dishonest? It is clear to us that they did not. They
would have known that honest traders would not have adopted the strategy that
they did and such traders would have considered it dishonest. As stated in Ghosh,
where the actions are obviously dishonest by ordinary standards, it will be obvious
that the defendant himself knew that he was acting dishonestly. We find that to
be the situation in this case. It follows that we reject Mr Newington-Bridges’
submission that the failure to correct the under-statements did not demonstrate
dishonesty. In the context of the strategy pursued by Mr and Mrs Walker it
clearly was.
118. We therefore
find that Europa evaded VAT dishonestly in respect of the periods which are the
subject of this appeal and that dishonesty was attributable to the dishonesty
of Mr and Mrs Walker. There was no argument on the quantum of what HMRC
contended was evaded and no submissions made on whether assignment of the
penalty assessed to Mr and Mrs Walker equally was inappropriate.
119. We are therefore
left to consider the question of mitigation. Mr Newington-Bridges submits that
there should be further mitigation to take account of the offer made on 19 March
2009 as detailed in paragraph 110 above. He submits that the offer was
evidence of a willingness to co-operate with HMRC and pay the VAT outstanding
more than a year prior to the penalty being imposed.
120. We reject that
submission. As we found in paragraph 113 above the offer was consistent with
the strategy of only engaging with HMRC when pressure was brought to bear in
this case and pressure of a winding-up petition. It cannot therefore be
regarded as a genuine attempt to co-operate. Furthermore, as Mr Singh aptly
put it, to give credit in this situation is akin to a thief offering to hand
back stolen goods and thereby avoid being sentenced for his crime. Mitigation
for co-operation is properly available where HMRC is assisted in coming to the
truth, for example by providing information and books and records in a timely
fashion when sought. The Walkers’ record in that regard and in ignoring
requests for meetings and then not appearing at scheduled meetings was
appalling and we see no basis on which the penalties should be subject to any
further mitigation.
Disposition
121. The appeals are
dismissed.
122. This document
contains full findings of fact and reasons for the decision. Any party
dissatisfied with this decision has a right to apply for permission to appeal
against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal)
(Tax Chamber) Rules 2009. The application must be received by this Tribunal
not later than 56 days after this decision is sent to that party. The parties
are referred to “Guidance to accompany a Decision from the First-tier Tribunal
(Tax Chamber)” which accompanies and forms part of this decision notice.
TIMOTHY HERRINGTON
TRIBUNAL JUDGE
RELEASE DATE: 3 July 2013
