Significant win for Tyr following heavy trial in £10m penalties appeal

A team led by Nigel Brook from Tyr’s contentious tax team has been successful in a multi-million-pound tax penalties dispute.  Ms Sharon Suttle faced bankruptcy if unsuccessful in her appeal, which was pursued by Tyr through to a two-week trial in London in December 2022.

Tyr’s client, Ms Suttle, was one of two directors of a company which had operated as an umbrella employer (now in liquidation).  HMRC alleged that the company had engaged in deliberate and concealed conduct resulting in an underpayment of tax.

This allegedly dishonest conduct was said to result in a total potential lost revenue of c. £12.5m over a six-year period (in relation to which HMRC issued decisions/determinations).  HMRC also imposed tax penalties on the company of a further c. £10.6m.

With the company in an insolvency process, HMRC pursued the company’s directors.  HMRC sought to pierce the corporate veil using its powers under paragraph 19(1) Schedule 24 Finance Act 2007; to impose personal liability notices (PLNs) on the directors for the penalty.

The appeals were heard before the First-tier Tribunal (Tax Chamber) in London at a two-week trial shortly before Christmas 2022.  The appeals featured detailed legal argument regarding the burden of proof; abuse of process / re-litigation; and blind-eye knowledge.

Judgment has now been handed down, with the Tribunal upholding the directors’ appeals.  The Tribunal accepted that there were inaccuracies in the company’s returns.  However, the Tribunal was not satisfied that HMRC had proven the quantum of the inaccuracies as assessed by HMRC.  The Tribunal found that the relevant conduct of the company was not deliberate (and not deliberate and concealed).  This meant that there was no deliberate conduct to be attributed to either of its directors.

Nigel Brook has acted in this matter since the PLNs were first appealed in 2017.  Nigel was assisted by Fiona Barber, an Associate in the contentious tax team at Tyr.  Tyr instructed Michael Ripley of 11 New Square. Nigel Brook commented: “This is a great result for Sharon, and I am pleased that we have been able to achieve some finality for her.  She demonstrated remarkable resilience in the course of protracted litigation, facing what would have been a life-changing outcome.  The arguments before the Tribunal were hard fought, and the judgment reflects them being carefully considered.”

Sharon Suttle & Anor. v HMRC [2023] UKFTT 873 (TC)

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