Zed-UK Limited & Anor v The Commissioners for HMRC

The first appellant is Zed-UK Limited ("Zed"). The second appellant is its director, Mr Zishan Choudry.

This appeal is against the following decisions, in chronological order:

These are the transactions:

A decision to make Mr Choudry personally and 100% liable for the Company Penalty under section 69D VATA 1994 (a Personal Liability Notice) was withdrawn by HMRC.

It is not in dispute that there was a VAT loss; and that this loss was occasioned by fraud. Nor is it in dispute that the denied transactions were (not 'might have been') connected with this fraudulent VAT loss.

This means that the only disputed aspect of the Decision is whether the Appellant had the requisite knowledge or means of knowledge.

Therefore, the issues to be determined by the Tribunal are:

HMRC bears the burden of proof, albeit only to the civil standard (that is, the balance of probabilities; or, put differently, whether something is likelier than not).

There is no material dispute as to the relevant law. This is well-known and can be set out in relatively short order.

The right of a taxable person to deduct input tax is contained within sections 24-29 of VATA 1994, reflect and transpose the corresponding European Community laws contained within Articles 167 and 168 of the VAT Directive. 

The right to deduct input tax will be lost where a taxable person "knew or should have known" that his transaction was connected with the fraudulent evasion of VAT. This is a test that was originally laid down by the Court of Justice of the European Communities ("CJEU") in Kittel, where the CJEU said:

This is known as the "Kittel" Principle, which was elaborated on by Moses LJ sitting in the Court of Appeal in Mobilx Ltd v HMRC [2010] EWCA Civ 517; [2010] STC 1436 ("Mobilx") where he stated:

In Mobilx the Court of Appeal warned against attempts to improve upon the principle laid down in Kittel: 

In relation to the phrase "the only reasonable explanation" used in Mobilx, this does not purport to change the test in Kittel:

Many cases on VAT fraud are ones which call for consideration of "circumstantial" evidence. The right approach to this was set out by the Court of Appeal in Mobilx, citing Christopher Clarke J. in Red 12 Ltd v HMRC [2009] EWHC 2563; [2010] STC 589 who said: 

A taxpayer does not need to know "the specific details of the fraud being perpetrated". In Fonecomp Ltd v HMRC [2015] EWCA Civ 39; [2015] STC 2254 per Arden LJ (as she then was).

It is dishonest for a person deliberately to shut their eyes to facts which they would prefer not to know. If he or she does so, then they are taken to have actual knowledge of the facts to which they shut their eyes. Such knowledge has sometimes been described as "Nelsonian" or "blind-eye" knowledge": see Lord Scott in Manifest Shipping Company Ltd v Uni-Polaris Shipping Company Ltd [2001] UKHL 1; [2003] 1 AC 469: 

In Mobilx Moses LJ said that the surrounding circumstances can establish sufficient knowledge to treat the trader as a participant, but that Tribunals should not unduly focus on the question whether a trader has acted with due diligence. Even if a trader has asked appropriate questions, he is not entitled to ignore the circumstances in which his transactions take place if the only reasonable explanation for them is that his transactions have been or will be connected to fraud. The danger in focusing on the question of due diligence is that it may deflect a Tribunal from asking the essential question posed in Kittel, namely, whether the trader should have known that by his purchase he was taking part in a transaction connected with fraudulent evasion of VAT. The circumstances may well establish that he was." 

In Mahagében kft v Nemzeti Adó- és Vámhivatal Dél-dunántúli Regionális Adó Foigazgatósága (C-80/11 and C-142/11) [2012] STC 1934 the CJEU said the following with regard to due diligence:

The case law indicates that it is necessary to guard against over-compartmentalisation of relevant factors, and to stand back and consider the totality of the evidence.

In considering circumstantial evidence, the Tribunal should take care not to restrict itself to considering each piece of evidence alone and in isolation from the others. This is because circumstantial evidence is not a chain, where a break in one link breaks the chain, but is a cord: one strand of the cord might be insufficient to sustain the weight, but three strands together might be sufficient: see R v Exall (1866) 4 F&F 922, per Pollock CB, cited with approval by the Upper Tribunal in CCA Distribution at [91]. Accordingly, the whole can end up stronger than the individual parts.

We read witness statements from:

We heard Mr Cook give oral evidence, and he was cross-examined by Mr Gibbon. At the time, he was a Higher Officer with HMRC's Fraud Investigation Service in Birmingham, having worked for HMRC since 1976. Subject to some qualifications set out in detail below, we accept his evidence.

Mr Choudry gave oral evidence, and was cross-examined in detail. The Tribunal also asked some questions. This gave us an excellent opportunity to assess the quality and cogency of his evidence.

Our overall impression was that Mr Choudry was an ambitious, but naive, young man. He may well have some technical IT skills, but in our view these were not matched by corresponding business skills, and especially the caution needed in dealing with persons or entities which he did not know. In our view, Mr Choudry was excited by the prospect of doing big deals for large amounts of money; but that sense of excitement obscured the need - which he knew of - to pause and reflect on the bona fides of his counterparties, and the commercial integrity of the deals.

Both in cross-examination, and even in re-examination, Mr Choudry struggled with some of the questions which he was being asked. At times, this appeared evasive. At other times, he simply seemed not to understand the situation which he was being asked to address, and, despite his educational accomplishments, seemed hopelessly out of his depth.

Indeed, this leads us to express scepticism as to whether the true governing 'business mind' of Zed was not Mr Zishan Choudry at all, but was someone else. Who that someone else was - whether his brother, or his father (both of whom were directors at the time of the denied deals, and until 14 September 2021, but neither of whom provided any witness statements), or someone else - we are simply unable to say. But the first Appellant - Zed - chose only to advance evidence from Mr Choudry (who has been its sole director since 15 September 2021) even though it is clear that his brother Zill-E-Elahi Zahoor Choudry (said to have been doing 'the buying and selling', and a co-director at the time of the denied deals) would have had useful evidence to give. Mr Choudry's oral evidence was that he and his brother were '50/50' splitting the deals which were in issue in this appeal.

Ultimately, we did not find Mr Choudry to be a credible witness. Even making allowances for the passage of time since the denied deals, his evidence was very patchy indeed, and unsatisfactory in much of its detail. It was a fair point that, in both cross-examination and re-examination, when presented with documents, it seemed as if it was the very first time that he was looking at them. We shall make more detailed findings as to his evidence below.

Zed was incorporated on 24 October 2011 and registered for VAT with effect from 1 April 2013. Its director was Mr Choudry, the second Appellant, who had graduated in IT not long earlier, and said that he wanted to be an IT wholesaler and supplier, and was selling goods on EBay.

At the time, Zed's estimated turnover was £80,000: that is to say, not far in excess of the threshold for compulsory registration. It declared that it did not intend to buy goods in the EU in the following 12 months.

At a visit by HMRC officers in June 2013, Mr Choudry was issued with VAT Notice 726 and the leaflet "How to spot a missing trader fraud". The officers remarked that the business had not really started, and so it was difficult to draw definitive conclusions about the credibility of MTIC risk at that point; that Mr Choudry's answers about why the company would be profitable, and why customers would choose to buy stock from it, seemed to lack credibility 'as he had no real answer'; there was no 'real business plan' in place; and there did not seem to be any reason why the company would succeed against its competition. HMRC's view at the time was that, although there were MTIC risk factors, it could also 'merely signal lack of experience at running a business'. Mr Choudry was 'strongly warned' about the dangers of MTIC fraud.

In February 2015, HMRC undertook a 'desk-based' audit of Zed's VAT returns for 07/13 to 04/14, and discussed the trading activity with Mr Choudry by email. Zed told HMRC that it had been the victim of fraud, with a potential loss of £15,000 and USD 20,000.

A second HMRC visit took place in April 2016, prompted by an inquiry from the German tax authorities about sales of computer servers made to a company called Tradeo GmbH. The Appellant told HMRC that he had been trading with Tradeo since 2012, had undertaken due diligence, and had spoken to its director.

From this, it can be seen that Zed, in 2013 and 2016, had direct contact with HMRC about its trading activities; had been given information to allow it to identify missing trader fraud; and had been put on notice that its needed to verify the identity and commercial bona fides of its counterparties.

On 17 December 2020, a person identified as 'Roger Digi C' 'WhatsApp'd' Zed 'out of the blue' to introduce itself. A Know Your Client pack was submitted on 5 January 2021. Even acknowledging that the UK was in the midst of the so-called 'Christmas lockdown', rendering travel and face-to-face meetings impracticable (or even illegal), there was no bar to meetings using widely available video platforms. But no such meeting took place. Mr Choudry said that it 'didn't cross his mind' to have a video call. We reject this evidence as improvisatory and trying to make things appear more benign in hindsight than they really were.

The failure to have a video call was a serious failing by Zed, because, at the very least, this would have allowed Zed to check that the person it was dealing with was the person whose passport they held. As matters transpired, it cannot have been, because Mr Green's identity had been hijacked by a fraudster or fraudsters unknown, who were the real person or persons behind Digi. It is now known that the picture on the passport is not the picture of the passport holder. It can remain only a matter of speculation whether, if a video call had taken place, whether the person appearing on the screen would have been the same person as shown on the passport photograph, or would have been able to explain the discrepancy.

Mr Choudry told HMRC, at a meeting on 16 June 2021, that contact witn Digi 'was via email mostly'; but we have not seen any such emails. He also told HMRC that his brother had spoken to the person identifying himself as Mr Green; but we did not hear evidence from his brother.

We do not agree with HMRC that the presence of VAT at a rate of 5% on a utilities bill put forward by Digi - charged to what was said by Digi to be its principal place of business - should necessarily have put Zed on notice that Digi was occupying residential premises rather than commercial premises. It seems to us that this point goes too far, and requires too much knowledge of differential tax rates from the taxpayer.

A deal and its terms were concluded at some point over the 2020/21 holiday season. Mr Choudry could not remember the negotiation (such as it was - the only evidence being which a small spatter of WhatsApp messages three messages weeks apart) but said that his brother could have explained it. That is likely correct, because his brother was the person in WhatsApp contact with Digi. But, in reality, there is no evidence of anything approaching a meaningful negotiation. The only outcome of this process, such as it was, was a change in price of £1 per unit. That is suggestive that demand was not a driving factor behind price; but some other factor was.

Zed's first purchase invoice from Digi is dated 5 January 2021 (being accounted for in VAT period 01/21, is not a deal which is part of this appeal). Zed had some diligence documents dated that same day, including an incorporation certificate dated 18 February 2016, a VAT certificate dated 15 December 2020 (with an Effective Date of Registration of 1 October 2018) and a photocopy of Roger Green's passport. Digi indicated that a trade reference (only one of the two which Zed usually required) from Unicorn Shipping in West Drayton could be obtained. There is no such reference in writing, and there is no written evidence that Zed took up that reference.

On 7 January 2021, Zed and Unicorn Shipping Ltd were in contact with each other about a supply of goods from Digi.

Zed bought Apple Airpods from Digi on 3 February 2021 for £80,620 net, plus £16,124 VAT. There was no evidence of any meaningful negotiation.

Zed bought Apple Airpods from Digi on 8 February 2021 for £139,000 net, plus £27,800 VAT. There was no evidence of any meaningful negotiation.

Zed bought Apple Airpods from Digi on 4 March 2021 for £94,800 net, plus £18,960 VAT. There was no evidence of any meaningful negotiation.

On 5 March 2021, HMRC cancelled Digi's VAT registration, with effect from 17 February 2021. The effect of that was that HMRC would not permit input tax deduction after 17 February 2021.

Zed bought 'Miscellaneous IT products' and Apple Airpods from Digi in two deals on 8 March 2021. There was no evidence of any meaningful negotiation. These were for £492,465 net plus £98,493 VAT for the 'miscellaneous IT products' and £166,370 net plus £33,274 for the Apple airpods.

That is to say, within about two months of first dealing with Digi, which had appeared 'out of the blue' Zed undertook, in rapid sequence, a run of three orders amounting to about £753,000 with VAT of about £150,000. These were deals for six-figure sums. Digi's VAT figures for 03/21 (monthly accounting) were £838,525 inputs and £940,377 outputs. These were the highest figures for any month in the periods 06/20 to 06/21. In 05/21 and 06/21 - that is to say, after the Digi trade had stopped - Zed's VAT figures were down into the single thousands for inputs and low double digits for outputs. That shows the amount of Zed's trade which was coming from the Digi deals.

On 26 March 2021, HMRC wrote to Zed about Digi, informing Zed of Digi's de-registration on 17 February 2021.

On 8 April 2021, HMRC conducted a telephone interview with Mr Choudry, who said that he did "the accounts, finance and wholesale, pretty much run the business; my brother does the buying and selling; and my father is a silent partner".

On 12 April 2021, HMRC requested documents relating to the denied transactions.

The transactions with Digi were ostensibly conducted on an 'ex works' basis, meaning that the customer themselves transported from Digi. Zed did not see the goods.

Payment was being made via Currency Cloud.

In an email sent on 29 April 2021, Mr Choudry said that Zed had checked on Digi by speaking to the logistics company, who confirmed the identity of Digi's director, said to be one Roger Green.

Mr Choudry told most of the communications with Digi were done by email, but he had spoken to Mr Green once, when Mr Green phoned him.

On 13 May 2022, Digi was wound-up.

Zed showed HMRC a company check report, which was produced after the relevant transactions. It suggested that Digi's business was "wholesale of furniture, carpets and lighting equipment", and, from a first year net worth of about £105,000, was, within 3 years, turning over more than £13.5m by 2019.

It is not in dispute that Digi was a defaulter. It was filing nil returns (and eventually, in August 2021, was assessed to VAT of about £2.9m). It does not matter that the loss brought about by Digi is greater than those with which Zed was involved, in the sense that there is no need to 'match' or 'allocate' the tax loss. It is notable that, perhaps as early as 2019, HMRC was in possession of some information which raised the possibility that Mr Green was not in fact a director at all (namely, a complaint by the real Mr Green that he had received a Corporation Tax bill for Digi) but was someone whose identity had been stolen. It is now clear that Digi was in the control of a fraudster.

Companies House records, available to Zed and Mr Choudry at the relevant times, showed that Digi (company number 10011922) was incorporated in 2016 as "Vision and Enterprise Ltd"; had been threatened with being struck off in May 2017; later changed to 'Trace Payroll Solutions Ltd'; changed its name again in April 2018 to Digi. It had had a succession fo registered offices: one which appeared to be a residential address in Liverpool; then an office address in Harbour Exchange, London, then an office address in Heywood, Oldham. A Mr Roger Raymond Green was recorded as having become a person with significant control on 17 October 2018, and remained so throughout (a change on 12 October 2019 seems to have been only to change his title from Mr to Dr).

At the time, Mr Green was also listed in the 'Officers' section of Companies House as the sole director (this listing was expunged by Companies House on 20 April 2021, using its statutory powers, when it became clear that the real Mr Green's identity had been hijacked).

Digi's confirmation statement filed on 9 May 2020 recorded its primary business as "wholesale of furniture, carpets and lighting equipment". This is something which Zed should have spotted; and, having spotted, explored.

Its annual report for the year ended 31 August 2019, filed on 28 November 2019, showed Mr Green as its sole director, with an increase in turnover from about £9.9m in 2018 to £12.9m in 2019 (or a year-on-year increase of about 30%), with a corresponding increased, and exceptionally healthy, gross profit (from £5.2m to £6.9m). Those accounts were apparently audited. The increase in turnover does excite interest; and Zed should have been asking itself, and Digi, questions as to why Zed should suddenly have become of interest to a company ostensibly as prosperous and successful as Digi.

Had Digi's filing history been thoroughly considered, as it should have been, then legitimate questions arose. The answers to those were potentially relevant to its financial standing and bona fides. For example, the circumstances in which it had been threatened with striking off; why it had moved office (and city) several times; why it had run through so many directors; and why it had at one stage apparently been involved in the 'payroll solutions' business.

Digi's filing history, properly considered, would also have revealed its dramatic increase in turnover - from £105,450 in 2016 to £13.5m (or about 130 times more) in 2019. It was a legitimate inquiry for Zed to have asked itself and Digi how a new business with no established presence in the industry could have accomplished this; especially since it was in a similar business to Zed, which had not been able to experience such as increase in turnover.

It was put to Mr Choudry that he did not critically think whether Digi was a company to trade with. We agree with this characterisation. We do not think that he did. It was also put to him that the checks which were done were 'window dressing'. We agree with this characterisation. We think that the checks which were done were limited and pastiche, at best.

Zed had two overseas wholesaler customers for the products which it was buying from Digi.

Ourea Baltic SIA was based in Latvia. Zed's due diligence showed that it was engaged in 'non-specialised wholesale trade - wholesale of textiles', but no-one at Zed asked why it was buying electronic goods. In period 02/21, the denied transactions make up about 97% of Zed's total outputs.

Pantheon Distribution GmbH was based in Austria, but with a trade reference from Slovakia. Pantheon said that Zed had contacted it. In period 03/21, the denied transactions make up about 99% of Zed's total outputs.

Zed purchased 8532 items of stock, and, on the face of it, was able to sell every single item to Ourea or Pantheon, without any apparent implementation hazard such as losses or breakages, short orders, or wrong items being delivered. This is striking, given that Zed was selling 'ex works', so that it never saw or handled the goods, meaning that it had no opportunity to examine them.

Hence, Zed's situation - looked at objectively - was that Digi had appeared from nowhere; with goods to sell; that Zed had found a receptive market abroad; which sales, within weeks, accounted for almost the entirety of Zed's total outputs. Zed - looked at objectively - was suddenly, and for no obvious reason, in the middle of a large volume of trade between a willing seller and willing buyers.

The mere fact of back-to-back trading, in and of itself, is not determinative of knowledge of connection to fraud. But it is a relevant feature in assessing the whole 'basket of evidence' in circumstances where Zed had been expressly warned by HMRC that 'back-to-back' sales were a potential indicator of fraud and thereby called for a degree of vigilance.

Zed has not called any oral evidence from its buyers, and it is clear that the buyers would have had useful evidence to give, especially as to the circumstances in which they became involved with Zed; and as to their view as to the commerciality of the denied transactions. This is not met by the provision of a letter from a director. We were not given any good explanation as to why no evidence had been obtained from any such witnesses.

We do not consider that we need to make any adverse findings concerning the presence of at least one other wholesaler in the chain (because Digi was not an authorised distributor); which itself puts in question the overall economic rationale of the denied transactions, because it is impossible to see what value Zed was adding.

Arguments as to whether HMRC should have acted with more celerity in warning Zed of the dangers of trading with particular counterparties; failed to prevent the fraudulent trading of the defaulter; or failed to tell Zed that Digi was alleged to be a fraudulent defaulter, are not justiciable in this Tribunal. It is quite irrelevant to that determination for the Tribunal to consider whether HMRC could have done more to prevent fraudulent trading: see Ronald Hull Junior Ltd v HMRC [2018] UKFTT 198 (TC) at [78] (Judge Mosedale). The Tribunal's jurisdiction is simply this: it must allow the Appellant's appeal unless it is satisfied, to the appropriate standard, that the Appellant knew or ought to have known that the denied transactions were connected to fraud.

In our experience, cases of this kind, by their very nature - where the taxpayer says not only that it is not an active participant in the fraud, but could not reasonably have been expected to have known of connection to fraud - are often decided on evidence which is, on one view, circumstantial.

In this case, there is no single feature of the evidence which, in and of itself, gives a conclusive answer. Our assessment exercise therefore has to be multi-factorial. We must consider and weigh up the totality of the evidence, documentary, written and oral.

The first deal with Digi was loss-making for Zed. HMRC invite us to consider this as evidence of actual knowledge of connection to fraud - in effect, as either a pre-planned loss, or a testing of the waters to see how quickly, if at all, HMRC would look into it. We do consider this deal - although not one of the denied deals - to be suspicious; and we did not find Mr Choudry's evidence in relation to it convincing.

We are not minded to give any weight to HMRC's reliance on the use of the banking platform 'Currency Cloud' as an indicator of connection to fraud. We were told that Currency Cloud has been regulated by the FCA since 2015. The guidance placed before us about "Alternative Banking Platforms" dates from June 2013, and so was 7 years old at the time of the denied transactions. Things moved on between 2013 and 2020, and at an increasing pace of change. Given, by 2020, the prevalence of internet-only banking providers (being banking providers without a 'high street' presence at all) and providers who readily remit money across borders, it simply seems incongruous for HMRC to have advanced this argument. Mr Cook's evidence that he would not trust a bank unless he could go to its local branch is, we respectfully observe, an attitude, even by 2020, somewhat out of date.

Nor are we minded to give weight to HMRC's case, advanced by Mr Cook in his evidence, that a prudent trader would necessarily demand to know where its supplier had in turn obtained its goods, and that such information could be obtained through entry into a Non-Disclosure Agreement. We have not encountered this happening, even in relation to unimpeachably legitimate deals; which means to say that we are not persuaded that it is a part of ordinary commercial practice. It seems to us that this argument therefore goes too far.

We do have regard and give weight to the poor quality of the evidence of Mr Choudry. We have already made some general comments above about this. More particularly:

His evidence was poor when it came to the details of his actual business. This throws real doubt on whether he was a person who was prepared to engage in fraud, or to turn a blind eye to it:

The above, taken as a whole, certainly gives rise to the real possibility that Zed's trades were being orchestrated - by somebody - to align with the availability of supplies from a fraudulent supplier, namely Digi.

When it came to the split between Zed's wholesale and retail sales activities - an important matter when the wholesale activities potentially raise risks of a different character and magnitude to retail activities - Mr Choudry's evidence was extremely vague. It generated the real impression that he did not really know how a business like Zed worked; nor indeed how Zed itself was operating. He could not satisfactorily explain the split between wholesale and retail sales. His evidence as to the percentage split between wholesale and retail was confused and confusing: that simply should not have been the case from a competent businessman. There was an impression that Mr Choudry was a passenger in the deals - that is to say, a largely passive observer as title to the goods and the money passed through Zed.

Mr Choudry could not give satisfactory evidence about Zed's pricing policy; whether generally or in relation to these particular deals. Mr Choudry was driven to accept in the course of cross-examination that, without the VAT element, the denied deals were all at a loss cumulatively. This gives rise to a strong inference that the driver of the denied deals was the incidence and recoverability of VAT. Mr Choudry could not explain why, given the presence of other parties (including any unidentified authorised distributor, from whom Digi - not itself an authorised distributor - must have been, whether directly or indirectly, obtaining the Apple airpods), all of whom would be expecting to make a profit, why Zed was not, without the incidence and recoverability of VAT, making a profit.

Mr Choudry was asked a key question. This was what value he and Zed were adding to these deals. This is an entirely reasonable and principled question to have asked a director giving evidence in relation to his business and these deals. Mr Choudry's response, after an extremely long pause, was that he could not answer the question. This was extremely telling. It exposed a pervasive lack of intelligible commerciality, when it came to Zed's involvement, in relation to the denied deals.

It was put to Mr Choudry that he was 'making a habit of ignoring VAT Notice 726' when it came to the denied deals. He emphatically denied this. We reject this evidence. The question is a fair characterisation of what was actually happening. Specifically, and in terms of VAT Notice 726 Section 6:

In our view, there is an adverse inference to be drawn from the failure of Mr Choudry's brother to give evidence. He was a director at the relevant time. Moreover, in circumstances where, in Mr Choudry's own oral evidence, Zed was 'in reality' him and his brother, with whom the deals in question '50/50' split, with them buying and selling alongside each other, and making decisions 'jointly', then Mr Zill Choudry would definitely have had useful evidence to give. Emails to HMRC in 2021 were signed jointly by Mr Choudry and his brother ('Zishan & Zill'). The Trading Application Form completed in relation to Ourea describes Zed's 'Owner/CEO' as 'Zishan/Zill Choudry', and describes Mr Zill Choudry as Zed's 'Authorised Purchase Manager' and 'Authorised Sales Manager'.

Mr Choudry's explanation that there was no witness statement from his brother because 'it wasn't asked for' is simply not credible. The best inference is that Mr Choudry's brother was not willing to give evidence to us because he was not prepared to corroborate what Mr Choudry was saying. It is also notable that Mr Zill Choudry was present in court when Mr Zishan Choudry was being cross-examined, and when points were being taken as Mr Zill Choudry's his failure to have given evidence. Even then, there was no attempt by Zed to provide a witness statement from him and/or to call him to give oral evidence.

Applying the guidance set out above as to the correct approach to evidence, including to circumstantial evidence, we do not consider there to be sufficient evidence - just about - that Zed actually knew of the connection to fraud.

However, in our view, and looked at overall, there were sufficient warning indicators to satisfy us, to the appropriate standard, that Zed should have known of the connection to fraud.

We reject the Company's position, set out in its Grounds of Appeal, that Zed 'was completely unaware of any such fraudulent activity'. We are satisfied that Zed ought to have been aware of such fraudulent activity.

Therefore, its appeal against the denial decisions is dismissed.

Section 69C of the VAT Act 1984 provides as follows:

The Tribunal has the power, where a person is liable to a penalty under section 69C, to reduce this penalty to such amount (including nil) as we think proper; but the Tribunal cannot take into account the sufficiency of funds available to any person for paying any VAT due or the amount of the penalty; the fact that there has been no significant loss of VAT; or the fact that the person liable to the penalty or a person acting on their behalf as acted in good faith: see VAT Act 1984 section 70(4).

In its Notice of Appeal against the Company Penalty, the Company contended that Conditions A and B were not satisfied. The Appellant made no submissions as to Condition C. The Company did not seek to argue that the appeal should have been reduced, or that there were any factors giving rise to mitigation.

Condition A is satisfied.

Condition B is also satisfied, for the reasons already set out above.

There is no challenge to Condition C.

The Company's appeal against the Company Penalty is also dismissed.

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.