Validity of penalty for MTIC fraud

HMRC had imposed a penalty under VATA 1994 s 60 on Mr Butt for his company’s involvement with missing trader intra-community (MTIC) fraud. Mr Butt was one of two directors of the company and owned 50% of the shares in it. The First-tier Tribunal and Upper Tribunal upheld the penalty.

Lady Justice Rose gave the decision in the Court of Appeal. She said it was common ground that s 60 was criminal in nature so the Charter of Fundamental Rights of the EU applied in particular art 49 on legality and proportionality. Mr Butt said an ‘essential step in establishing the company’s liability to a s 60 penalty was to show that it had evaded tax. HMRC said it had done this by falsely claiming input VAT. To decide whether it was entitled to the VAT it was necessary to look at the earlier provisions of...