“Paying the penalty – abuse of process and the standard of proof in Finance Act 2007 Penalties”
On 6 July 2020 the Upper Tribunal handed down its decision in Lindsay Hackett v The Commissioners for Her Majesty’s Revenue & Customs [2020] UKUT 0212 (TCC). Jonathan Kinnear QC and Howard Watkinson appeared for HMRC. Mr. Hackett was the recipient of a Personal Liability Notice under para.19 of Schedule 24 to the Finance Act 2007 in the sum of nearly £13 million issued on the basis that there were deliberate, and in some instances deliberate and concealed, inaccuracies in the VAT returns of the company Intekx Ltd, of which Mr. Hackett was the sole director. In short, HMRC’s case what that Mr. Hackett knew that the relevant transactions were connected with the fraudulent evasion of VAT.
Mr. Hackett firstly contended that the decision to proceed by way of a penalty was an abuse of the Tribunal’s process, because he should have been prosecuted in the criminal courts where he would have had the benefit of a jury and other apparent benefits. The Upper Tribunal extensively reviewed the previous case law on the ambit of the First-tier Tribunal’s jurisdiction to stay proceedings for abuse of process, noting that the alleged abuse fell outside of the Tribunal’s jurisdiction because it was not related to the fairness of the proceedings themselves [51]. It is now clear that a party who wishes to make such an argument will have to do so in the Administrative Court through a claim for judicial review.
The Upper Tribunal then revisited the authorities on the standard of proof in such case, again affirming that the standard of proof is the civil, not the criminal standard [90].
This case was a timely review of issues of the abuse of process jurisdiction of the Tribunal, and the burden of proof, in the context of one of the largest PLNs known to have been issued by HMRC.
Jonathan Kinnear QC and Howard Watkinson continue to act for both HMRC, and taxpayers, in allegations of financial wrongdoing at the highest level, in both the Criminal and Civil Courts, and the Tax Tribunals.
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