HMRC seek repayment after Fast Tax Rebates Ltd take most of rebate

[Schipoo]

Hi everyone, after everything being quiet for abit I’ve received this today. 
TC00 - TC-2021-11498 HMRC 2.pdf

[slick132]

Hi Schipoo,

 

So this is from HMCTS to HMRC and copying you in.

 

Are you aware of the post here on Rob Carr's thread - 

https://www.consumeractiongroup.co.uk/topic/447080-hmrc-seek-repayment-maxwell-and-ftr-ltd/?do=findComment&comment=5185966

 

[Schipoo]

I know, it gives a deadline of January but I guess it could be submitted anytime between now and then.
I wasn’t, but have just read it. 

[Schipoo]

Hey everyone I received this statement of case yesterday 

Final SOC.pdf

[unclebulgaria67]

Quite complex arguments, but I wonder whether a simpler argument would be better made.

 

Who is responsible for a debt obligation that arises from the criminal actions of a third party ?

 

If this were not related to a tax issue, but some other form of financial transaction, would a court make the victim of an alleged scam responsible for the full value of the alleged scam, even though they only received a small portion of the proceeds of the alleged scam, which was conducted without their awareness.

 

What other legislation or case law might exist to help the tribunal answer the question ?

 

 

 

 

[slick132]

HMRC's arguments pretty much mirror things they've stated previously in submissions.

 

They're trying to assert the FTT has little or no jurisdiction in these matters.

 

Also they say - The Respondents contend Regulation 8 of the Income and Corporation Taxes (Electronic Communications) Regulation 2003 is satisfied. 96. Regulation 8 states: “Any information delivered by an approved method of electronic communications on behalf of any person shall be deemed to have been delivered by him unless he proves that it was delivered without his knowledge or connivance.”

 

The Respondents submit the wording of the Regulation is clear that the evidential burden of proof lies with the Appellant to demonstrate that she had no knowledge or connivance of the delivery of the information.

 

I have said all along that you (Schipoo) knew Maxwell was acting on your behalf but never knew or connived in relation to the actual information submitted by the "tax spacialists", nor did you specifically know about FTR.

 

Have you sought to join the other Group Action or are you going to make your own submission to the FTT in response?

 

[Schipoo]

Hi Slick132

 

I had been waiting for a price from them to represent me but they never came back to me 

[slick132]

Hi Schipoo,

 

Get back to them asap and remind them you're awaiting a reply.

 

You and others here are getting to the stage when you could really benefit from specialist advice in handling the formal stages of your appeal. Being part of a Group Action handled by tax litigation specialists could be your best option.

[Schipoo]

Hi, 

I’ve been in the US and haven’t had chance to go through the correspondence you posted as yet. I have had an email today with the tribunal. I have to have my response in by 28th April. I will post what they have sent once I’ve redacted them. I’m home tomorrow night so it’ll be at some point over the weekend. 

[Schipoo]

Direction 23.3.23.pdf

FTT 5.03.02 22 R - TC-2021-11498 HMRC.pdf 23.3.23.pdf

 

I have read all of the details of the other case and noted the following similarities 

 

Requested a code and requested appellant give the code to open up tax years and submitted an SATR for the appellant. 

1st was in the favour of Cryoblast which is the same company involved with FTR although this case it is capital allowances consultants Ltd. 

Subsequent SATR requested in the name of ECO cooling solutions ltd (not connected to mine). 

 

 

HMRC’s position is that the assessments were made in accordance with s29 TMA. The officer reasonably believed that there was an insufficiency to tax; this was based on the information provided by the Appellant who did not dispute that he was not eligible for EIS relief, the claim in respect of which was paid by HMRC and caused the insufficiency to tax.

 

Using the code, the agent can sign into their account to enter the code and complete the authorisation process. HMRC argue that the Appellant provided his code to the agent and thereby authorised CACL to act on his behalf. Had the Appellant not wished CACL to act on his behalf, he need not have provided the code.

 

It is fair to say that HMRC’s case relied on evidence provided by Mr Robson. Mr Robson has always accepted that he did not make an investment. Mr Robson has consistently maintained that the EIS claim was made without his knowledge and without his authorisation.

 

The box on the declaration was clearly completed by CACL or the return would not have been received by HMRC. However, I am satisfied that Mr Robson had not seen the return, he had not confirmed the accuracy of its contents and he had not given authority for its submission. For the reasons set out above, I rejected HMRC’s submissions that the email correspondence showed that Mr Robson knew a SATR was to be submitted on his behalf and that he authorised CLAC to do so; I am not convinced the evidence supports such a finding. I do not consider the fact that the email chain heading changes to “tax return” or the reference to an investment are sufficient when viewed against Mr Robson’s honest and credible evidence to demonstrate that Mr Robson knew a SATR would be submitted or that he authorised it.

 

While cases such as this must be rare, it appears to be an unfortunate loophole in HMRC’s system that this process was open to abuse.

 

 For the reasons set out above, the appeal is allowed

[slick132]

Hi Schipoo,

 

You're approaching the final stages of the FTT appeals process and need to prepare carefully to stand a chance of winning in the way Robson won the case highlighted on the general FTR thread - Robson v HMRC https://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08746.pdf

 

You need to do more than highlight similar points from the Robson ruling which, by the way, is a useful ruling but not a legal precedent.

 

If you want to join a group action which you know of, now is the time. Otherwise you'll have to knuckle down and use all the info we've seen here to prepare a formal case in the format required by the judges Directions.

[Schipoo]

I have tried to make contact with Group Action numerous times and their representative just isn’t getting back to me. It’s really frustrating. I know that putting a case like that together is probably way above my head

[slick132]

Hi Schipoo,

 

A useful summary of the Robson case is set out here by Accountingweb - Loophole leaves agent authorisation open to abuse - you may need to register to read the whole article and the replies from accountancy professionals.

 

You should find it helpful in understanding how HMRC lost and Robson won the appeal.

 

Pay particular attention to what's said under this sub-heading - Belief of carelessness - and the subsequent heading.

 

Focus on what was said in the judge's ruling about the actions of CACL being fraudulent. Also, bear in mind that FTR committed their fraud without you knowing what they'd done - ie they submitted tax returns NOT as your agent but as if you had submitted them yourself.

[Rob Carr]

Thankfully, from 15 March 2023 it is no longer possible for a taxpayer to assign income tax repayments to an agent, which should remove the incentive for this type of fraud.

 

Interesting...

[Schipoo]

Well that speaks volumes 

[Schipoo]

I managed to speak to them today and they have requested a stay until either confirmation comes through of the final motion on the Robson case, or that HMRC confirm whether they will appeal. 
All of the group action appellants had the same firm of accountants who committed the fraud, Robson was also originally being represented by Group Action but decided to go it alone 

[slick132]

You mean you spoke to the firm running the Group Action ?

 

Are you interested in joining their Group Action; or are they willing to let you join it ?

 

If not, did you discuss or consider seeking a stay in your own case ?

[Schipoo]

Yes, I spoke to the company who run group action. 
I am interested in joining them, the only thing that makes me apprehensive is the company who defrauded in my case is the same in every other case but mine. 
They advised that they would request a stay on my behalf but that would cost a couple of hundred pounds to do so. 
I am assuming I could request a stay myself? 

[slick132]

Sorry Schipoo but your 2nd sentence above makes no sense. Did the other cases involve FTR like your case, or not ? If they're about another fraudulent company, please say which.

 

A couple of points -

 

1. Yes you can of course seek a Stay of the proceedings yourself but HMRC may be more likely to oppose it in your individual case, compared to a group action brought by a professional firm.

 

2. Only time will tell if HMRC accept the Robson ruling but I suspect they'll either challenge it, or they'll simply not recognise is as setting any precedent.

[Schipoo]

Sorry, I would be the only one who was defrauded by FTR. Capital Allowances Consultants Ltd is the company involved with all of the other cases. 
They’ve already had the stay agreed so they would be doing mine on its own anyway. 
The other issue is that the guy who has dealt with with the group Action is leaving company in the next month so it will be someone else dealing with it going forward. 
 

[slick132]

Understood thanks.

 

I can only assume the firm will continue to provide good service for those in the group action despite the loss of the staff member who has handled the cases so far.

 

Only you can decide if £200 is good value for having a firm represent your application to Stay the process. Have they said they'll represent you if you want them to, if the main hearing goes ahead. If I recall correctly, you have between £15K and £20K at stake if HMRC succeed.

 

I think you still have a good case (maybe even better) even though it's different from the CACLtd scenario.

[slick132]

Opened

[Schipoo]

Hi everyone,

thought I’d give you an update on my case. So I thought I would be being represented by Independent Tax as part of a group action, however this has taken a complete u-turn. This is the email I received from Independent Tax

 

I hope this email finds you well.

Tribunal Update

Unfortunately, we have received the decision from Tribunal which has disbanded the group.

This means that your hearing will now be held individually rather than previously when we intended on using a sample group of people.

The main reason for this is that following an application by HMRC, the judge has agreed with their submissions and believes that they need to focus on each individual’s specific circumstances.

As such they want to hear each case individually rather than using a sample approach.

This is because they believe the determinant is not in what happened but whether the actions that you each took individually were reasonable.

Whilst we disagree with this position, unfortunately now that the judge has taken this view and, as they will be the person making the decision, it is unlikely that any submissions would be able to convince them to overturn the decision.

 Current directions

As the Group case has been unjoined, we have received directions on how Tribunal would like to proceed, which given the short timeframe and lack of documentation, is unachievable.

As such, we have asked for an extension of time of 45 days for the Group, to which HMRC have agreed, meaning that unless the Judge objects (which is extremely unlikely) the new deadlines were provided to those witnesses who were part of the Group. As the Group has been unjoined, there is no possibility for you to be a part of the Group.

The new deadlines for your individual case will be as below:

1. List of Documents – Due 11th December 2023 (this is the extension time limit)
2. Witness statements – Due 8th January 2024
3. Listing information – Due 22nd January 2024
   1. Whether Counsel is appointed
   2. Number of participants
   3. Confirmation that all participants will attend the hearing
   4. Where a participant is a witness, if they will attend the entire hearing
   5. How long the hearing is expected to last
   6. Whether reading time should be allocated
   7. Dates to avoid between 25th March 2024 and 26th July 2024
4. Document bundle – 5th February 2024

As you are aware, when we brought you into the group the intention was to minimise costs for the hearing however, given the new updates and the level of work required, this will no longer be possible.

As you will appreciate, our costs will be substantive going forward working on your individual case and therefore, we will need to discuss the commercial viability of proceeding.

Next steps

We have had three options on how to proceed:

1. We could have attempted to issue a joining application again to rejoin you to the group.

 This would mean that we write to the judge and ask for it to be rejoined on the basis that it will not allow you to participate fully in proceedings otherwise.

If successful, it would allow us to revert to the original strategy of using a sample group and ensuring we can be cost-effective with our approach. However, as the judge has made the decision to unjoin, we believe that the chances of a successful rejoining would be small.

2. We can provide general group-wide material that will help you adhere to the requirements by way of template material, while you progress the Tribunal matters yourselves.

We would look to provide you with templates for each area that you would like help with. If there are any elements that you really struggle with, we can also step in and do this for you.

Our fees for this service would be charged on a time cost basis to you directly.

This is our preferred option as it means that we do not completely leave you to do your own work.

3. You can disengage our services and proceed through the process on a personal basis.

This means that we will disengage as advisors for you at Tribunal and you will be left to correspond with Tribunal without any further input or assistance from ourselves.

[Rob Carr]

I would double check with the tribunal that you have been granted an extension til 11th December as part of the group. My case was unjoined due to it being Max Tax/ Fast Tax and not CACL, so an extension wasn’t applied for on my behalf. I have emailed hmrc and the tribunal today requesting one.

[slick132]

Hi Schipoo,

The tax agent says the extension was applied for (to the FTT) and agreed by HMRC. But, as Rob Carr says, you'd be wise to check with the clerk at the FTT that the extension has been granted and the dates are as set out by the agent.