BACHRA v Revenue & Customs (PERSONAL LIABILITY NOTICE - penalty issued to sole director of company - company had been assessed to VAT as a result of denial of input tax deduction on Kittel grounds)

PERSONAL LIABILITY NOTICE - penalty issued to sole director of company - company had been assessed to VAT as a result of denial of input tax deduction on Kittel grounds - whether inaccuracies in company�s VAT return - whether any such inaccuracies were deliberate, including significance of whether inaccuracy upheld on basis of knew or should have known� - whether any deliberate inaccuracies were attributable to Appellant - held company should have known, insufficient to constitute deliberate inaccuracy - appeal allowed

For the Respondents: �� Howard Watkinson and Ishaani Shrivastava, counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs

             Mrs Bachra has appealed against HMRC�s decision of 15 December 2017 to issue her with a personal liability notice (�PLN�) pursuant to paragraph 19 of Schedule 24 to the Finance Act 2007 (�FA 2007�).� The PLN issued on that date was for �1,177,422.96.� HMRC have since withdrawn 43 purchases by OWD from these appeals, and by the time of the hearing took the position that, based on the re-calculated potential lost revenue (�PLR�), the penalty due was �928,551.20.

             The issues in this appeal (on which HMRC bears the burden of proof) are set out fully below and included Mrs Bachra�s challenge to some of the transaction chains, the denial that OWD knew or should have known of the connection to the fraudulent evasion of VAT, the denial that any inaccuracies were deliberate and against any such inaccuracies being attributable to Mrs Bachra.

             On the basis of our findings of fact and for the reasons set out fully below, we have decided that all of the transactions which are the subject-matter of this appeal were connected with the fraudulent evasion of VAT and that OWD should have known of that connection.� However, we concluded that OWD did not know of the connection and, on this basis, the inaccuracy was not deliberate and the conditions were not satisfied for HMRC to be able to issue the PLN to Mrs Bachra.� Accordingly, Mrs Bachra�s appeal is allowed.