Jurisdiction(s):
United Kingdom

UKUT clarifies penalty burden; reaffirms Pegasus Birds; remits VATA 1994 s73 ‘best judgment’ assessment in HMRC v Sintra Global

Published on: 20 November 2024

Published by a LexisNexis Tax expert

Legal News

Article summary

HMRC v Sintra Global Inc & another [2024] UKUT 346 (TCC)

A penalty arose from the company’s purportedly dishonest omission to tell HMRC that it was liable to register for VAT and to file VAT returns, and it rested on a ‘best judgment’ assessment made by HMRC under section 73 of the Value Added Tax Act 1994 (VATA 1994). The UT sent back to the FTT the questions about the assessment’s validity and amount, remitting those issues for reconsideration and fresh findings. The dispute involved two offshore companies, both directed by the same individual, which HMRC alleged participated in the fraudulent redirection of alcohol into the UK and the subsequent sale of that alcohol in the UK market. The FTT had upheld the appellants’ challenges. HMRC then took the matter to the UT on six grounds, contesting the FTT’s conclusions. Its primary ground said the FTT made an error of law by concluding that HMRC carried the burden of proof concerning the penalties it had levied. The UT held that, although the taxpayer typically bears the burden regarding the quantified tax assessment, HMRC bears it where the decision is to impose in this context and on these facts...

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