Purple Pay Limited & Anor v The Commissioners for HMRC
Neutral Citation: [2026] UKFTT 00625 (TC)
Case Number: TC 09859
FIRST-TIER TRIBUNAL
TAX CHAMBER
[By remote video hearing]
Appeal reference: TC/2024/04181
TC/2024/03772
PROCEDURE – partial strike-out application – whetherjurisdiction– whether reasonable prospect of success – no – whether abuse of process – no – application granted
Heard on: 9 February 2026
Judgment date: 24 April 2026
Before
Between
PURPLE PAY LIMITED
First Appellant
and
DENNIS FENEMORE
Second Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Heard, in Chambers, on the papers on the application of the parties immediately before the video hearing listed for 9 February 2026.
Further written submissions for the Respondents dated 19 March 2026
DECISION
Introduction
The respondents (“HMRC”) applied to strike out, in part, the Grounds of Appeal relied upon by the appellants (“the Application”).
The first appellant’s appeal was against the imposition of a stop notice penalty (“the Penalty”) issued pursuant to Schedule 35 Finance Act 2014 (“FA 14”).
The second appellant appealed against the imposition of a Joint and Several Liability Notice (“JSLN”) issued pursuant to paragraph 5 Schedule 13 Finance Act 2020 (“FA 20”) dated 11 March 2024. The JSLN was in the sum of £3,865,000.
Both appeals were allocated to the Complex category and were directed to proceed and be heard together by the Tribunal.
HMRC argue that part of the first appellant’s Grounds of Appeal (and to the extent that the second appellant also relies upon the same Grounds of Appeal) should be struck out on the basis that:-
those Grounds of Appeal are outside the Tribunal’s jurisdiction, and/or
they have no reasonable prospect of success, and/or
they are an abuse of process because they seek to go behind the stop notice jurisdiction.
The Disputed Grounds of Appeal
Specifically, HMRC sought strike out of the arguments relating to:
the first appellant (“the Company”) having ceased business operations at the time the stop notice was issued,
no one at the Company being responsible for the “design, organisation or management of arrangements” and the conditions of “carrying on a business as a promoter” were not met, and
there being no breach of the stop notice.
Preliminary Issue
The application to determine matters on the papers rather than by video hearing
The Application was listed for hearing by video on 9 February 2026. On 30 January 2026, counsel for the appellants intimated to the Tribunal that they were no longer acting for them. Later that day, the Tribunal received an email which appeared to come from the second appellant stating that neither appellant was now represented and neither would attend the video hearing. He requested that the Application be determined on the papers and he enclosed a copy of the draft Skeleton Argument prepared by Julian Hickey and Andrew Wood of counsel who had previously acted on a public access basis.
On 2 February 2026, HMRC filed their Skeleton Argument and expressed their concern that the email from the second appellant was unsigned and there was not an identifiable link to the appellants.
On 3 February 2026 the Tribunal wrote to the parties intimating that Judge Williams had decided that until such time as the sender of the email was identified, the request that the Application be determined on the papers would not be considered.
Late on 6 February 2026, counsel for HMRC contacted me because both Skeleton Arguments had recommended reading time and there was concern that I had not been made aware that passport identification had been provided. In those circumstances, HMRC were content to proceed on the papers. I confirmed that I would decide the matter on the papers. However, the Tribunal did check the video link on 9 February 2026 and there was no appearance by or for the appellants.
I had a hearing bundle extending to 353 pages and an authorities bundle extending to 596 pages. I had a Skeleton Argument for HMRC. I had a draft Skeleton Argument prepared for the appellants by two Counsel instructed on a public access basis but who have since resigned agency. It extended to 27 pages with a six page appendix of statutory provisions. I had the email trail relating to the application to determine the Application on the papers.
When writing the decision, I noted the recent decision in Hall v HMRC [2026] UKFTT 124 (TC) (“Hall”) which had not been cited to me. On 26 February 2026, in Directions issued to both parties, I stated that, in the appellants’ interest, I intended to refer to Hall “peripherally” and, in the interests of justice, invited submissions from HMRC, if so wished. HMRC filed Further Written Submissions dated 19 March 2026.
In the interim, the second appellant had emailed both HMRC and the Tribunal asking if matters could be put on hold until his return from the Middle East.
On 19 March 2026, I issued further Directions recording the procedural history and directed the second appellant to either file a submission on Hall or confirm that no submission would be filed and that by 27 March 2026. I also directed that if there was no compliance with that Direction then the decision would be issued in the normal course. There was no compliance and therefore no submission.
The Late Appeal by the Company
The appeal by the Company was late and therefore there was an application to extend the time to appeal. In the Application and in the Amended Statement of Case, HMRC neither opposed nor consented to that application stating that it was a matter for the Tribunal to determine in light of the Company’s Grounds of Appeal.
The basis of the application for a late appeal was as described in a letter of 1 July 2024 (the “July Letter”) from Mr Wood, the then Counsel for both of the appellants, to HMRC and reiterated in the appeal to the Tribunal. That stated that the Company “has no appetite to appeal the original decision to issue the stop notice.”. However, it did wish to challenge the Penalty.
In summary, it was argued that:
The Company had ceased trading almost a year before the stop notice was issued. It was understood that the final real-time information (RTI) submission was filed around January 2022 and the Company had had no “active workers” from around 31 January 2022 but confirmation was sought from HMRC.
The Penalty could only have been issued for non-compliance with the stop notice if the Company had done anything in connection with arrangements that would cause it to have been acting as a promoter. As the arrangements had been would up, there was no one in the Company responsible for design, organisation or management of the operations which had ceased. The Company was not trading and could not be acting as a promoter so therefore the Company could not have been subject to a penalty.
The Penalty had been issued over 18 months after the Company had ceased trading and a year after formal striking off proceedings had commenced.
HMRC had been writing to an address, which was the registered office but which was no longer utilised by the Company so the directors were not aware of the correspondence. The agreement with the service office provider had been terminated.
The second appellant had not been a director of the company when it ceased trading.
The sums involved were very large.
A late appeal would allow the issues to be heard and if the conditions for the penalty were found to have been satisfied, HMRC would not be prejudiced.
There is a wider public interest in relation to “inequitable and wholly disproportionate penalties”.
It would be in the interests of justice to permit a late appeal.
Further information was requested from HMRC.
There was no reply from HMRC and the appeal to the Tribunal was lodged on 24 July 2024.
HMRC’s Skeleton Argument did not address the issue of a late appeal beyond noting that the appeal was late.
I do not propose to address in any detail the well known principles on applications to make a late appeal as set out in Martland v HMRC [2018] UKUT 178 (TCC).
I find that the delay in appealing was both serious and significant. I am not persuaded by the argument that the stop notice was issued to an address that was not used by the Company not least because that is the address used in the Notice of Appeal to the Tribunal. In any event, no reason has been advanced for the failure to either notify a new address for the Company or arrange for mail to be forwarded; it is simply stated that mail was “not read or actioned”. However, taking into account inter alia:
HMRC’s neutral stance,
the fact that, of consent, the appeals are proceeding together and the JSLN is predicated on the Penalty issued to the Company,
on 30 January 2025, the Tribunal directed that following the joinder of the two appeals HMRC should file one combined Statement of Case and that was filed timeously,
the significant sums involved, and
Rule 2 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (as amended) (“the Rules”).
I choose to exercise my discretion to allow the late appeal to be admitted.
The relevant background facts
On 6 April 2021, the Company came to HMRC’s attention for appearing to be involved in promoter activity, namely a Disguised Remuneration scheme.
On 13 December 2021, under section 310D Finance Act 2004 (“FA 04”), HMRC wrote to the Company issuing a notice of potential allocation of a scheme reference number (“SRN”) to the arrangements described in the notice (“the Arrangements”).
On 11 January 2022, the then director of the Company, a Mr Ward, responded to HMRC making representations that no SRN should be allocated.
On 28 January 2022, a new director, Ryan Laville, was appointed and on 31 January 2022, Mr Ward resigned.
On 1 February 2022, HMRC notified the Company that Mr Ward’s representations did not satisfy HMRC that the Arrangements were not notifiable so therefore it was appropriate to allocate an SRN pursuant to section 311 FA 04. The SRN was issued under section 311(3) FA 04. The Company was given until 3 March 2022 to complete and give a form to all persons who had been provided with services and also to notify HMRC of those persons’ details in a “client list”. It was pointed out that HMRC might publish information about the Arrangements and the Company as a promoter of the Arrangements. It also indicated that a penalty of up to £5,000 per person to whom a form should have been sent but was not, and up to £5,000 per person whose identity was not included in the client list, might be levied.
The Company was told that there was no right to request a review of the decision to allocate an SRN but the Company had the right to appeal to the Tribunal.
No client list was furnished to HMRC, no forms were issued and no appeal was made to the Tribunal.
The Company filed its final RTI submission for the period ending 5 April 2022 showing that it continued to have 286 employees or “users”.
On 11 July 2022, the second appellant was appointed as a director of the Company. On the same day the then director, Mr Laville, resigned.
On 27 July 2022, HMRC wrote to the Company referring to the letter of 1 February 2022 and issued an Information Notice to the Company pursuant to section 311C FA 04. It requested information and documents about inter alia how the Arrangements were designed, marketed, intended to work and achieve a tax advantage in the period 6 April 2020 to 27 July 2022. The Company was given a deadline of 16 August 2022 to comply which failing penalties at a rate of up to £600 per day might be imposed. There was no compliance.
The Registrar of Companies commenced strike off proceedings on 11 October 2022 which were suspended on 15 November 2022 following an objection by HMRC.
On 6 January 2023, an authorised officer of HMRC issued the stop notice to the Company pursuant to section 236A FA 14 together with a copy of Fact Sheet CC/FS61. It was issued because the authorised officer suspected that the Company “promote, or have promoted, arrangements” described as an “Equity Participation Scheme”. Under the heading “What you must do now” the Company was specifically told to “tell your clients and intermediaries that you are subject to a stop notice” and “make quarterly returns about your clients” with the first relevant period being from 12 January 2023.
The first quarterly return (for the period 12 January 2023 to 12 April 2023) was due to be made to HMRC on 27 April 2023. HMRC pointed out that a return was required even if there were no relevant clients, ie a nil return was required.
The Company was notified that it might be liable to very significant penalties if there was non-compliance with the stop notice including the requirement to make quarterly returns.
The Company was notified about its right to request that HMRC withdraw the stop notice provided that a request was received by 11 February 2023 and that there was a right to appeal any decision on such a request. No request was made.
On 5 April 2023, HMRC wrote to the Company intimating that details of the arrangements would be published online on the page called “Details of known tax avoidance schemes and promoters” within 30 days.
On 4 August 2023, HMRC sent two almost identical letters to the Company stating that it was liable to pay a penalty on the basis that “You are liable to pay a penalty because did (sic) not give us your quarterly return for the period ended 12 April 2023” and in the second letter “for the period ended 12 July 2023”. It did not quantify the penalties. The Company was invited to make representations.
None were provided.
On 13 October 2023, the Penalty was issued to the Company in respect of the failure to provide a quarterly return pursuant to section 236C FA 14. The penalty was in the sum of £3,865,000 and was charged under paragraph 2(1) Schedule 35 FA 14.
The Penalty was quantified on the basis of:
“•
the number of entries that should have been on the quarterly return if had you (sic) submitted onethe number of days your quarterly return was late – we’re charging the penalty from the date you should have sent us your quarterly return to the date of this notice”.
The number of missing entries was stated to be 605 at £5,000 per missing entry (£3,025,000). The number of days was stated to be 168 at £5,000 per day (£840,000).
HMRC explained that they had arrived at the figure of 605 having reviewed all employees paid by the Company dating from the first RTI return to the last (March 2022) and the total number of employees over the period had been 605. HMRC assumed that all of those employees should have been included in the return due to be filed by 27 April 2023 because the Company had “continued to make the arrangements available to users until March 2022”.
The last date by which the Company could appeal the Penalty was 12 November 2023 but there was no challenge.
On 30 November 2023, HMRC wrote to the Company confirming that they had published information about the Arrangements on 13 April 2023 and that they now intended to publish information about the Company itself on the website “Named tax avoidance schemes, promoters, enablers and suppliers”. They stated that the information would be published within 30 days of the date of the letter and would stay online until either HMRC decided to remove it or the stop notice ceased to have effect because the SRN was withdrawn. The Company had no right of appeal.
On 11 March 2024, the JSLN was issued to the second appellant together with a covering letter.
Insofar as relevant the covering letter read:-
On 13 March 2024, HMRC wrote to the Company notifying it of the introduction in the Finance Act 2024 of two new criminal offences relating to stop notices.
The second appellant initially contacted HMRC by telephone, and then emailed HMRC on 5 April 2024 referring to the call the previous week, appealing the JSLN, stating that he had supporting evidence and that:
He had spoken to the “previous director” who had agreed that the “director/directors responsible” would either be prepared to take responsibility for giving the requisite information to HMRC or they would “take control of this matter”.
His involvement with theCompany had arisen because he had known the previous director personally and had been approached to take over the Company which “was being wound down and would be shut down by Dec 2022”, so that he could contact potential candidates for recruitment; the previous director had a new position and could not remain a director of an umbrella payroll company.
On becoming a director, he found that the Company had not traded “for over a year” so there were no candidates. He was then told that the business was being shut down in a few months and “I wasn’t liable for anything that was ongoing with the business”.
No letters from HMRC or anyone else had been forwarded to him and he “never had access to head office or mail for this business”.
Had he been made aware of this “I would have had the responsible director/directors take control of the business to ensure this was all taken care of…”.
He had been chasing for a year to find out why the business had not been shut down and was just told that there were process delays; he had been reassured that since he had had zero dealings with the business “any problems would be passed back to the relevant director/directors”.
He had documented conversations via messages and voice recordings.
He chased HMRC for a response on 16 April 2024 and, on 24 April 2024, HMRC confirmed that they would review the decision in light of the new information.
The Review Conclusion letter dated 3 June 2024 upheld the issue of the JSLN. It also stated that:
“HMRC holds information that suggests that the company ceased trading in March 2022 and that its business was transferred to another company from April 2022.
The Registrar commenced strike off proceedings on 11 October 2022 which are currently suspended.”
On 29 June 2024, Counsel for the second appellant appealed the JSLN to the Tribunal. The arguments advanced were as set out in the July Letter (see paragraph 17 above).
In particular, the formal Grounds of Appeal included:
The Company could not have been in breach of the stop notice primarily because it was not in business as a promoter, or at all, from around January 2022. The Penalty could only have been issued for non-compliance with the stop notice if the Company had done anything in connection with arrangements that would cause it to have been acting as a promoter. In terms of the legislation, a promoter is “responsible to any extent for the design, organisation or management of the arrangements” and when the stop notice was issued the Arrangements and the Company’s activities had been would up. No one was responsible for the Arrangements. Therefore, the Company could not have been subject to the Penalty.
The second appellant was not a director at any time that the Company was actively involved in activities or business that would make it a promoter.
The conditions for issuing a JSLN were not met inter alia because it was argued that the Penalty had not been validly issued as there could not have been a breach of the stop notice.
The July Letter was issued to HMRC three days later. Apart from dealing with the issue of a late appeal for the Company, as can be seen, it rehearsed the same arguments as those included in the second appellant’s appeal.
It explained that, as at July 2024, since the appellants did not have the stop notice or the Penalty, the nature of the breach had not been identified. The conditions for issuing the Penalty were not understood. However, if it was a breach of the requirement to file quarterly returns that would be a technical breach only.
No quarterly returns had been filed but:
HMRC had information about the users and the requirement to submit a return was a duplication, and
Counsel for the Company had been told in “a separate case” that nil returns were not required.
No one at the Company was responsible for the “design, organisation or management of arrangements” and the conditions of “carrying on a business as a promoter” are not met.
The quantum of the Penalty is excessive.
Prior to the issue of the stop notice, the Company’s name had been removed from HMRC’s list of named tax avoidance schemes and promoters etc, having been placed on the list in April 2022.
The second appellant had engaged with HMRC as soon as they contacted him. It would be “unjust and inequitable” in relation to him if the appeal were not to be admitted late because he had not been a director when the Company had operated as an umbrella business.
Counsel asked for a response by 12 July 2024 which failing, an appeal would be lodged with the Tribunal.
On 30 July 2024, HMRC responded to the letter of 1 July 2024 enclosing copy correspondence including the stop notice which they confirmed had also been sent to the agent who was on record at the time. They stated that they awaited the litigation.
The Grounds of Appeal for the second appellant had requested that his appeal be stayed behind the Company’s appeal but on 19 November 2024, HMRC applied to the Tribunal to lodge one unified Statement of Case and one hearing and that was granted, of consent.
The Application was filed on 2 April 2025, HMRC’s amended Statement of Case presaging that having been filed on 6 March 2025. The appellant lodged a response opposing the Application.
The Relevant Law
The primary legislation
FA 20
Section 100(1) reads:
“Schedule 13 makes provision for individuals to be jointly and severally liable, in certain circumstances involving insolvency or potential insolvency, for amounts payable to the Commissioners for Her Majesty's Revenue and Customs by bodies corporate or unincorporate”.
Insofar as relevant, Schedule 13 reads:
This Schedule provides for an individual to be jointly and severally liable to the Commissioners for Her Majesty's Revenue and Customs, in certain circumstances involving insolvency or potential insolvency, for amounts payable to the Commissioners by a company.
Such liability arises where the individual is given a notice under—
paragraph 2(1) (tax avoidance and tax evasion cases),
paragraph 3(1) (repeated insolvency and non-payment cases), or
paragraph 5(1) (cases involving penalty for facilitating avoidance or evasion).
A notice under paragraph 2(1), 3(1) or 5(1) is referred to in this Schedule as a ‘joint liability notice’.
…
5(1)
An authorised HMRC officer may give a notice under this sub-paragraph to an individual if it appears to the officer that conditions A to D are met.Condition A is that—
a penalty under any of the specified provisions (see sub-paragraph (6)) has been imposed on a company by HMRC, or
proceedings have been commenced before the First-tier Tribunal for a penalty under any of those provisions to be imposed on a company.
Condition B is that—
the company is subject to an insolvency procedure, or
there is a serious possibility of the company becoming subject to an insolvency procedure.
Condition C is that the individual was a director or shadow director of the company, or a participator in it, at the time of any act or omission in respect of which—
the penalty was imposed, or
the proceedings for the penalty were commenced.
Condition D is that there is a serious possibility that some or all of the penalty will not be paid.
The specified provisions are—
…
paragraphs 2 and 3 of Schedule 25 to FA 2014 (promoters of rax avoidance scheme penalties);
…
Withdrawal or modification of notice
HMRC must withdraw a joint liability notice given to an individual, by giving a further notice to the individual, if—
any of the relevant conditions were not met when the joint liability notice was given, or
it is not necessary for the protection of the revenue for the notice to continue to have effect. …
HMRC may withdraw a notice given to an individual under this Schedule, by giving a further notice to the individual, if they think it appropriate to do so even though sub-paragraph (1) or (3) does not apply.
Right of appeal
An individual who has been given –
a joint liability notice, or
…
may appeal against the notice to the First-tier Tribunal.
…
Appeals under paragraph 13
On an appeal under paragraph 13 –
the tribunal must set aside the notice appealed against if it appears to the tribunal that—
any of the relevant conditions were not met when the notice was given, or
it is not necessary for the protection of the revenue for the notice to continue to have effect;
the tribunal must set aside the notice or vary an amount specified … if it appears to the tribunal that the amount specified is incorrect;
otherwise, the tribunal must uphold the notice.
It is not open to an individual appealing under paragraph 13 to challenge the existence or amount of any tax liability of a company to which the joint liability notice in question relates.
(But see paragraph 15, under which the individual may in certain circumstances pursue an appeal in place of the company.)
Where a notice is set aside under sub-paragraph (1)(a)(ii), the setting aside of the notice does not give the individual a right to recover any amount that the individual has already paid to HMRC in response to the notice.
Appeal in respect of liability of company
Where –
an individual is made jointly and severally liable by a joint liability notice for a tax liability of a company,
an appeal by the company in respect of that liability has been commenced (whether before or after the joint liability notice is given) but has not been determined, and
the company is subject to an insolvency procedure,
the individual is entitled to be a party to the proceedings, and may continue the appeal if the company is unable or unwilling to do so.
Where –
an individual is made jointly and severally liable by a joint liability notice for a tax liability of a company, and
the company is subject to an insolvency procedure and does not make an appeal in respect of that liability,
An appeal made under sub-paragraph (2) may be commenced within the period of 30 days beginning with the day on which the joint liability notice is given (even if a time limit for the company to appeal has expired).”
FA 14
Paragraph (5)(6)(b) of Schedule 13 FA 20 refers to paragraph 2 Schedule 35 FA 14 which reads insofar as relevant:-
Fails to comply with a duty imposed by or under this Part mentioned in column 1 of the Table is liable to a penalty not exceeding the amount shown in relation to that duty in column 2 of the Table …”
|
Column 1 |
Column 2 |
|
Provision or duty |
Maximum penalty (£) |
|
… |
… |
|
Section 236C(1) (duty to make return to HMRC) |
£5,000 |
In relation to a failure to comply with section 236C(1) the maximum penalty specified in column 2 of the Table is a maximum penalty which may be imposed—
in respect of each failure to provide the required information or statement (see section 236C(6)) about a relevant client (within the meaning given by that section), and
for each day on which a complete return is not provided after the end of the period within which it must be provided (see section 236C(7)).”.
I annex at Appendix 1 the full text of sections 236A to E but, insofar as relevant, section 236 provides:
At A that “An authorised officer may give a person a notice (a “stop notice”) if the authorised officer suspects that the recipient promotes, or has promoted, arrangements of a description specified in the notice or proposals for such arrangements.” (Emphasis added)
At B that the effect of the stop notice is that inter alia the recipient must furnish HMRC with client lists and notify clients of the stop notice.
At C which deals with the requirement to file quarterly returns, even nil returns, that “A person subject to a stop notice must provide a return to HMRC containing the information described in subsection (4) for each relevant period…”. (Emphasis added)
At D that a recipient of a stop notice may make a request for the notice to cease to have effect, ie effectively for it to be withdrawn. That request must be made in writing within 30 days of issue of the stop notice.
At E that a decision refusing such a request can be appealed to HMRC or the Tribunal within 30 days.
Paragraph 9 of Schedule 35 FA 14 reads:
“Reasonable excuse
For the purposes of this paragraph—
an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person's control,
if the person relies on any other person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure,
if the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased,
reliance on legal advice is to be taken automatically not to constitute a reasonable excuse where the person is a monitored promoter if either—
the advice was not based on a full and accurate description of the facts, or
the conclusions in the advice that the person relied on were unreasonable,
and
reliance on legal advice is to be taken automatically not to constitute a reasonable excuse in the case of a penalty for failure to comply with section 258, if the advice was given or procured by the monitored promoter mentioned in subsection (1) of that section.”.
Paragraph 10 of Schedule 35 FA 20 provides that part 10 of the Taxes Management Act 1970 (“TMA) has effect in relation to inter alia penalties arising for a failure to comply with section 236C(1) FA 20.
The Tribunal Rules
It is not disputed that:
in terms of Rule 8 of the Rules the Tribunal must strike out the whole or part of proceedings if it has no jurisdiction (Rule 8(2)),
it may do so if the Tribunal considers that there is no reasonable prospect of the appellant’s case, or part of it succeeding (Rule (8(3)(c)), and
the power in Rule 8(3)(c) is wide enough in its terms to include a strike out application based on abuse of process
Paragraph 19 Shiner & Anor v HMRC [2018] EWCA Civ 31
Paragraph 34 Badaloo t/a Church Hill Finance v FCA [2017] UKUT 158 (TCC)
Case Law
The First De Sales Limited Partnership v HMRC [2018] UKUT 396 (TCC) (“First de Sales”)
The well-known principles determining when an appeal should be struck out as having no reasonable prospect of success are as set out in First De Sales:
The question is whether the appellants have a “realistic” as opposed to a “fanciful” prospect of successfully defending the appeal.
The appellants’ case must therefore have some degree of conviction, in that it is more than merely arguable.
In answering the question, no “mini trial” must be conducted.
It is not necessary to take at face value assertions, without analysing what is said, particularly if contradicted by contemporaneous documents.
Consideration should be taken not only of the evidence available at the time the application is made, but also what evidence could reasonably be expected to be available at the hearing.
The Tribunal should not make a final decision “where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence”.
If there is a short point of law or construction and it seems that a case is bad in law, and there is available evidence, the sooner that is determined the better.
The submissions on Hall
As I have indicated at paragraph 12 above, I sought submissions in relation to Hall because Judge Amanda Brown KC had given detailed consideration as to whether it was appropriate, in that case, to strike out a JSLN issued under section 100 FA 20. She had refused HMRC’s strike out application.
In their written submissions, HMRC had identified three determinations in Hall, namely:
The JSLN was a criminal charge for Article 6 of the European Convention on Human Rights (“EHCR”) purposes and the recipient was presumed to be “innocent” (see paragraph 75 of Hall);
The burden of proof was on HMRC to show a prima facie case that the requirements of the provisions in FA 20 in that case were met (see paragraphs 76 and 77 of Hall);
The Tribunal has jurisdiction to determine public law arguments in the context of that case (see paragraphs 79 to 84 of Hall).
HMRC argued that Hall was wrongly decided in that the decision “was reached without proper regard for the classification of provisions in domestic law as either civil, or criminal.” and the classification of JSLNs should be civil rather than criminal. Accordingly, HMRC did not bear the burden of proof.
However, it was argued that regardless of that, the Application was maintained and even if the JSLN was classified as criminal, the criminal head of Article 6 does not per se prevent strike out. In their submissions, HMRC referred to CF Booth Limited v HMRC [2022] UKUT 217 (TCC) (“Booth”) at paragraph 58, and also generally, in support of that proposition.
Discussion
I have had regard to Rule 2 of the Rules and the overriding objective that parties should be able to participate as fully as possible. I have set out the procedural background, facts and law at such length since the appellants are now unrepresented, very large sums of money are at stake and the Application relates only to some of the Grounds of Appeal. Of the remaining Grounds of Appeal some at least potentially involve public law arguments; hence, in part, my expressed intention to make a peripheral reference to Hall.
I do not intend to opine on the detail of Hall since, both the JSLN and some of the arguments advanced in relation to the Application in these appeals can, in large part, be distinguished from those in Hall. Hall was concerned with a JSLN in terms of paragraph 3 Schedule 13 FA 20 which is “Repeated insolvency and non-payment cases”. That raises different factual issues to this JSLN which is “Cases involving penalty for facilitating avoidance or evasion”. Nevertheless, Hall is relevant. Like Judge McNall at paragraph 22 in Robert Crawford v HMRC [2022] UKFTT 37 (TC) (“Crawford”) to which the appellants had referred, I agree that it is at least arguable that the Penalty constitutes a criminal charge for the purposes of Article 6 of the EHCR.
However, I agree with HMRC’s alternative argument to the effect that even if the JSLN is classified as criminal in nature then Booth makes it clear that Article 6does not prevent strike out. At paragraph 61 the Upper Tribunal stated that:
We also accept HMRC’s submissions that Article 6 does not override the FTT’s case management powers or other limitations on appeals against tax penalties.”
The case management powers to which the Upper Tribunal was referring included, in particular, Rule 8 of the Rules.
Since I accept that argument, in the circumstances of these appeals and since I am looking only at the Application, I do not require to consider further the classification of the Penalty.
Unlike (for example) the High Court, this Tribunal has no inherent jurisdiction. The jurisdiction of this Tribunal is entirely statutory. Therefore, the source of any jurisdiction to decide an appeal must be found in legislation. If there is no such source, then there is no jurisdiction.
Unfortunately, some of the arguments advanced for the appellants do not appear to be anchored in the relevant legislation. In correspondence and in the Grounds of Appeal it is stated that the Company “has no appetite to appeal the original decision to issue the stop notice”. The next sentence in the Grounds of Appeal went on to say that “…no admission is made as to whether the decision to issue it was valid…”.
In correspondence with HMRC on 14 October 2024, Counsel for the appellants requested a stay of the second appellant’s appeal on the basis that the underlying matter, being the Company’s appeal was an appeal of the “stop notice and penalty”. The stay was not granted.
The fact is that there is no statutory right to appeal the stop notice. The Tribunal has no jurisdiction to consider any purported appeal of the stop notice itself and, in those circumstances, must strike out any attempt so to do. The stop notice must stand and the only challenge that can be made by the Company is an appeal of the Penalty.
However, the Grounds of Appeal conclude at paragraph 41 by stating:
“For the avoidance of doubt, this [appeal] concerns both the validity of the issuance of the stop notice penalty and / or the quantum of the penalty.”.
As HMRC has repeatedly, and correctly, stated, in order to challenge the validity of the stop notice itself, the Company would have had to have made a withdrawal request within 30 days as specified in section 236D FA 14. If HMRC had received such a request and refused to withdraw the stop notice, then an appeal would have been feasible in terms of section 236E FA 14 but none of that happened.
The only competent appeals before the Tribunal are the appeals of the Penalty and the JSLN. It is not disputed that paragraph 9 of Schedule 35 FA 14 provides that the Company is entitled to rely on the defence of “reasonable excuse” in the appeal against the Penalty. I must determine the jurisdiction of the Tribunal in relation to the JSLN, in particular, by reference to paragraphs 13 and 14 of Schedule 13 FA 20. However, the quantum, if any, of the JSLN is inextricably linked to the Company’s appeal.
The starting point is to look at the disputed Grounds of Appeal in the context of the applicable law.
The first is that the Company had ceased business operations at the time that the stop notice was issued. The problem is that, as can be seen from paragraph 64 above, and, in particular the emphasis I have added to the quotation, in terms of section 236A FA 14, the authorised officer only had to suspect that the Company had promoted the Arrangements. The evidence is clear to the effect that that was the case; hence the allocation of the SRN whilst the Company was still trading.
I have been cited no statutory requirement to the effect that the Company had to be trading when the stop notice was issued and I am aware of none.
In any event, as can be seen from paragraph 16 above, as far as the Company is concerned, it has made no attempt to challenge the decision to issue the stop notice. It made no timeous request to HMRC for withdrawal of the stop notice (ie in terms of section 236D FA 14 within 30 days of the issue of the notice).
The argument that it was relevant that the Company had ceased trading when the stop notice was issued is linked with the second disputed Ground of Appeal being that no one was responsible for the design, organisation or management of arrangements and the Company was not “carrying on a business as a promoter”.
Even a cursory glance at sections 236D and 236A FA 20, which fall to be read together, show that the stop notice legislation looks to the historic position as well as the current position. For example, section 236D provides that a withdrawal request can only be made where the person, subject to a stop notice, “does not intend to promote and has not promoted…”. Section 236A to which section 236D refers also uses phrases liked “Such arrangements, have been or are likely to be, marketed” and “HMRC has required any person to provide information …”.
As can be seen from paragraphs 17(b) and 53 above, these two Grounds of Appeal have been advanced because it is argued that the Penalty can only be imposed for non-compliance with the stop notice if the Company had done anything in connection with the Arrangements that would have caused it to have been acting as a promoter.
That is quite simply incorrect. As HMRC has always made explicit, including in the letters of 4 August 2023 (see paragraph 38 above) and in the Penalty itself (see paragraphs 40 to 43 above), the Penalty was issued because the Company had failed to comply with the statutory requirement to file the quarterly return(s).
Section 236C FA 14 is expressed in mandatory terms, and that is why I have added emphasis to the quotation at paragraph 64(3) above.
The Penalty has been imposed because of a breach of section 236C FA 14. It is not disputed that no quarterly returns were ever filed. Paragraph 2(1A) of Schedule 35 FA 14 provides for a penalty to be imposed where there is a failure to comply with the provisions of section 236C FA 14.
That takes me to the third disputed Ground of Appeal which is that there was no breach of the stop notice.
As can be seen from paragraph 64(2) and (3) above, the stop notice having been issued and not withdrawn, it was mandatory for the Company to issue the forms, furnish the client list(s) and file quarterly returns. There was more than one breach, albeit HMRC has addressed only one.
The supporting arguments that it was a technical breach to fail to file the quarterly returns and that HMRC held the information about the users do not assist either appellant. The simple facts are that
the stop notice continued in force and effect as it had not been withdrawn,
there was a breach of the stop notice, and
the legislation makes provision for the imposition of a penalty in that event.
Looking at First de Sales, leaving aside for now HMRC’s arguments about it being an abuse of process to challenge the validity of the stop notice, these three disputed Grounds of Appeal are arguments that are “bad in law” and have no realistic prospect of success and therefore they should be struck out (see paragraph 67(1), (2) and (7) above).
As far as abuse of process is concerned, I observe that paragraph 7 of the appellants’ draft Skeleton Argument argued that there could not be an abuse of process because there was a realistic prospect of success. Given my finding that there is no realistic prospect of success, the corollary of that is that there is an abuse of process. Further, as I have indicated at paragraph 66 above, abuse of process is a sub-set of Rule 8(3)(c) of the Rules.
These three Grounds of Appeal fall to be struck out in terms of that Rule as I find that there is no reasonable prospect of that part of the appellants’ case succeeding.
To the extent, that it is argued that these Grounds of Appeal are a challenge to the validity of the issue by HMRC of the stop notice itself, and it is not entirely clear whether that is being argued, they fall to be struck out in terms of Rule 8(2)(a) of the Rules as the Tribunal has no jurisdiction in that regard.
Decision
For all these reasons, the Application is granted.
Directions
Whereas on 16 July 2025, Judge Bailey suspended the obligation on the parties to file their List of Documents in these appeals pending determination of the Application, I now DIRECT that by no later than 5pm on 22 May 2026 the parties shall lodge with theTribunal agreed Directions for the further progress of these appeals. In the event that agreement cannot be reached then HMRC shall lodge with the Tribunal and the appellants, Draft Directions and that within the same timescale. By no later than 5 pm on 29 May 2026, the appellants shall lodge with HMRC and the Tribunal any objection thereto which failing the Directions will be issued.
Right to apply for permission to appeal
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.
Release date:
24 April 2026