V5: Other penalties

DOTAS penalties (failure to notify etc.)

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See TMA 1970, s.98C

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HMRC must commence penalty proceedings before the FTT

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"[148] The relevant legislation is to be found in Sections 98C, 100C and 118 TMA. The first sets out the penalty provisions.  The effect of Section 100 TMA is that an HMRC officer is not permitted to make a determination to impose a penalty for non compliance with a promoter’s  obligations under Section 308(3) FA 2004. The officer must commence penalty proceedings before the FTT. Section 118 is the reasonable excuse provision." (HMRC v. Hyrax Resourcing Limited [2022] UKFTT 218 (TC), Judge Anne Scott)

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Whether scheme is substantially the same as a previously disclosed scheme

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"[177] Like the Court in Walapu at paragraph 168 we find, as did Judge Mosedale in the DOTAS Decision, that the two schemes and, in the case of the DOTAS Decision, the previous schemes also, were very similar economically and financially but they are fundamentally different in both their factual and legal consequences.

[178] Patently, the sole point of the Hyrax arrangements, as Judge Mosedale, and we, have found, was to render the ineffective K2 arrangements effective.

[179] As Sir Duncan Ouseley pointed out, and Judge Mosedale and we have found, the whole purpose of the Hyrax arrangements was to obtain a tax advantage. The very obvious purpose of the legislation is to prevent that.

[180] We find that, for all of these reasons, K2 and the Hyrax arrangements are not “substantially the same” and therefore Hyrax’s argument on deemed disclosure by no later than 2 June 2017 fails." (HMRC v. Hyrax Resourcing Limited [2022] UKFTT 218 (TC), Judge Anne Scott)

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Amount of penalty

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"[303] We accept HMRC’s argument that the penalty imposed should act as a deterrent. It should certainly do so to deter others from deliberately setting up a company with a sole director who can at best be described as displaying Nelsonian acuity in regard to the company’s affairs. It should also act to deter those who rely only on the advice of the promoter of the tax avoidance scheme and a promoter who makes large sums of money from it.

[304] We do not accept that the question as to whether the Hyrax arrangements were notifiable was extremely complex and therefore that was a reason for non-compliance. Sir Duncan Ouseley rightly described it as being a “rigmarole”.

[305] The Hyrax arrangements had ceased to operate before the matter reached the Tribunal so no remedial action was possible.

[306] We have considered all of the factors identified in Tager and weighed all relevant circumstances in the balance. We are particularly mindful of the fact that David Gill sought to hide behind Joanne Macnamara whilst at all times being actively involved.

[307] We find that this was a very serious matter and the statutory maximum penalty is appropriate.  The statutory maximum penalty for the period 9 April 2014 to 5 March 2019, being 1,791 days at £600 per day totals £1,074,600." (HMRC v. Hyrax Resourcing Limited [2022] UKFTT 218 (TC), Judge Anne Scott)

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