The Commissioners for HMRC v Sintra Global, Inc & Anor

Ordinary disputes about tax liability, including liability to register for VAT, do not engage the criminal-charge protections of Article 6. The taxpayer therefore bears the legal burden of displacing an assessment or registration decision, even where fraud or dishonesty is pleaded.

In penalty proceedings, HMRC must prove the primary facts and bespoke statutory conditions of penalty liability. If the taxpayer challenges an underlying tax liability reflected in the penalty, a separate legal burden rests on the taxpayer to establish that the liability is wrong. Separate tax and penalty appeals must be analysed separately. On materiality, the question is whether the tribunal might, objectively, have reached a different result without the error.

HMRC issued VAT and excise-duty assessments, penalties and personal or director liability notices against Sintra Global, Inc and Mr Parul Malde. Global appealed against its VAT registration decision and registration penalty. Mr Malde appealed against three personal liability notices and a director’s liability notice.

The First-tier Tribunal allowed the relevant appeals, relying in part on its conclusion that HMRC bore the burden of proving the underlying tax liability. The Upper Tribunal dismissed HMRC’s challenge to that conclusion in [2024] UKUT 00346 (TCC), declined to follow Zaman, and allowed other grounds concerning the treatment of evidence and a best-of-judgment assessment. HMRC appealed on three grounds concerning the burden of proof, the assimilation of separate appeals, and materiality of error. The central issues were how tax liability and penalty liability should be separated, and who bore the burden on each issue.

1. Ground 1 allowed. Ordinary disputes about VAT or excise-duty liability, and about liability to register for VAT, fall outside Article 6. On such appeals the taxpayer bears the legal burden of displacing the assessment or decision and establishing the correct tax position. Pleading fraud or dishonesty does not reverse that burden.
2. In penalty proceedings, HMRC bears the burden of proving the primary facts and bespoke statutory conditions required for the penalty. However, where the taxpayer contends that an underlying tax liability reflected in the penalty is wrong, a separate legal burden rests on the taxpayer to establish that position. That burden is the same as on an appeal against the underlying assessment. The underlying tax issue can ordinarily be severed from the penal issue, so Article 6 does not apply to it. This avoided inconsistent results depending on whether the tax issue was determined before, concurrently with, or during penalty proceedings.
3. The approach applied to the penalties under Finance Act 2007 Schedule 24 and Finance Act 2008 Schedule 41. HMRC retained the burden on matters such as deliberate or careless conduct, attribution to an officer, and other bespoke conditions. The dicta in Euro Wines suggesting that HMRC bore the burden on all ingredients of an excise penalty were obiter and mistaken and should not be followed.
4. Ground 2 allowed. Global’s appeal against the VAT registration decision and its appeal against the registration penalty were separate statutory appeals. The Upper Tribunal erred by subsuming the former into the latter. Global bore the burden on the registration decision and the underlying tax liability; HMRC bore the burden on the penalty-specific conditions.
5. Ground 3 allowed. Materiality of an error of law is ordinarily assessed by asking whether the tribunal of fact might, rather than would, have reached a different conclusion without the error. The FTT’s compartmentalised treatment of the evidence prevented proper consideration of the evidence as a whole and was objectively capable of affecting the place-of-supply conclusion.
6. HMRC’s appeal was allowed on all three grounds. The open appeals were to be remitted to the FTT for rehearing, at least on the place-of-supply issue, with the question of a differently constituted panel and further directions left for written submissions.

• Court of Appeal (Civil Division): [2025] EWCA Civ 1661. HMRC’s appeal allowed on all three grounds. The open appeals were remitted to the FTT for rehearing.
• Upper Tribunal (Tax and Chancery Chamber): [2024] UKUT 00346 (TCC). Ground 1 was dismissed. Other grounds were allowed, but the decision was set aside only insofar as it concerned the director’s liability notice, with those issues remitted.
• First-tier Tribunal (Tax Chamber): [2022] UKFTT 0365 (TC). The relevant appeals of Global and Mr Malde were allowed.