[2012] UKFTT 603 (TC)
TC02280
Appeal number:
TC/2011/00603
PROCEDURE – appeal –
application for stay of proceedings pending possible criminal proceedings –
factors to be taken into account – held, on facts, hearing of appeal not
prejudicial to such possible proceedings – in any event, not known whether
director likely to be charged – delay between arrest and date of application –
discretion under Tribunal Rule 5 – application of overriding objective under
Rule 2 – application refused
FIRST-TIER TRIBUNAL
TAX CHAMBER
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AABSOLUTE BOND
LIMITED
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Appellant
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- and -
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THE
COMMISSIONERS FOR HER MAJESTY’S
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Respondents
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REVENUE &
CUSTOMS
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TRIBUNAL:
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JUDGE JOHN CLARK
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Sitting in public at 45 Bedford Square London WC1B 3DN on 24 August 2012
Razwan Ashiq, instructed by
Rainer Hughes, Solicitors, for the Appellant
Sarabjit Singh, instructed by
the General Counsel and Solicitor to HM Revenue and Customs, for the
Respondents
© CROWN COPYRIGHT
2012
DECISION ON
APPLICATION FOR A STAY OF PROCEEDINGS
1.
By a notice dated 14 August 2012, the Appellant (“ABL”) applied for a
stay of six months in respect of the proceedings in respect of this appeal.
This application was referred to Judge Berner, who considered the matter on the
papers and directed that the application should be considered at an oral
hearing. As the Judge who had been listed to hear the substantive appeal, I
considered the application at the hearing on 24 August 2012 and refused the
application. As requested at the hearing, I agreed to produce a decision
setting out the reasons for refusal, and the principles which I took into
account in arriving at my decision.
2.
The hearing of the substantive appeal has since taken place, on the
listed dates of 10 and 11 September 2012. As ABL instructed different Counsel
to appeal on its behalf for the substantive hearing, and as the Tribunal for
that hearing included a member, who was not present at the application hearing,
I have prepared this decision separately from that relating to the substantive
appeal.
Background
3.
Although there was no formal evidence for the application hearing, it is
necessary to give some information concerning the background circumstances. The
substantive appeal concerns a VAT assessment in respect of goods allegedly
delivered to ABL’s bonded warehouse between February 2008 and July 2008 but
found not to be present when that warehouse closed in August 2009. Mohammed
Hanif Rafiq was a director of ABL at the time of the alleged deliveries to the
warehouse and at the time of its closure, but has since resigned as a director.
I was informed at the hearing of ABL’s application that Mr Rafiq had at the
material times been, and continued to be, the only shareholder in ABL. His
co-director had remained as a director.
4.
The assessments made by the Respondents (“HMRC”) had been, respectively,
an assessment to Excise Duty and an assessment to VAT. Subsequently both the
Excise Duty assessment and the VAT assessment had been withdrawn on review. The
decision by HMRC’s Review Officer was expressed to be without prejudice to any
further action that HMRC might consider.
5.
Further assessments were then made by HMRC in November 2010, based on
further evidence. In July 2011 the further Excise Duty assessment was withdrawn
by HMRC as having been made out of time. The VAT assessment was not withdrawn,
as HMRC considered it to be within time under the applicable VAT legislation.
That assessment is the subject of the substantive appeal proceedings.
6.
ABL’s Application Notice dated 14 August 2012, was as follows:
“Take notice that the Appellant’s [sic]
applies for a stay on the appeal.
On the 14th September 2011 the Appellant
was arrested for [sic] suspicion of tax evasion by HMRC Criminal
Investigations. The Appellant was one of 16 individual who were arrested, and
two of whom were HMRC officers. The Appellant has been bailed to return on the
12th September 2012. Those instructed by the Appellant have not been
informed by the HMRC Criminal Investigations whether Appellant will be charged
on the 12th September 2012.
The Appellant respectfully submits that the Tribunal
Proceedings would seriously prejudice the outcome of the pending criminal
investigation and we do, resultantly, urge you to adjourn this matter pending
the outcome of the HMRC investigations.
Thos instructed by the Appellant in this matter have
also been instructed by some of the other individuals who were arrested on the
14th September 2011. These individuals also have civil matters and
tax appeals at this Tribunal and the Solicitors Office have consented for the
matters to be stayed for six months pending the outcome of the criminal
investigation.
The Appellant submits that the Respondent will not
be prejudiced for a stay to be granted. The Appellant submits that the
Respondent is already holding the VAT.
The Appellant seeks a stay for 6 months on the
appeal.”
7.
I was informed at the application hearing that Mr Rafiq had been
required to make payment to HMRC pursuant to a guarantee.
Arguments for ABL
8.
Mr Ashiq explained that Mr Rafiq, as a director of ABL, was due to
appear at a police station on 12 September, the day after the Tribunal hearing
was due to conclude. Two allegations were under review. The first was that
there were two HMRC officers who had allegedly been supplying confidential
information to people within the alcohol trade. The second was that Mr Rafiq
had been involved in “diversion fraud”, and that ABL had been complicit in
this. Mr Rafiq had been interviewed after arrest, but on legal advice had made
no comment. The questions had related to the relationship to the HMRC office to
the workings of ABL, and to the goods being missing. In the course of his bail
application, which had been granted on various conditions including denial of
access to his passport, it had been intimated that HMRC objected to bail, the
issues being Mr Rafiq’s links, ABL’s operations, and the tax matter relating to
missing goods.
9.
Mr Ashiq accepted that ABL’s application should have been made earlier,
but submitted that this did not detract from the force of its contentions.
10.
ABL was the Appellant in the present proceedings. It was artificial to
say that it existed in a vacuum. Mr Rafiq’s evidence was central to the appeal.
ABL was complicit in the criminal allegations, as it was said to be the vehicle
for fraud. Counsel for HMRC in the Magistrates Court had alluded to the missing
goods. In the appeal before the Tribunal, the issue concerned accounting for
the VAT.
11.
Mr Ashiq referred to the question of prejudice. First, Mr Rafiq had an
inalienable right to remain silent in any interview conducted by HMRC’s
Criminal Investigations office. Any evidence which he gave in the Tribunal
appeal proceedings could, and no doubt would, be used by HMRC. In any
subsequent trial, the judge had power to exclude evidence. Mr Ashiq argued that
this was limited to cases where the evidence was unlawfully obtained or had no
probative value; as a consequence, this effectively meant that Mr Rafiq’s
evidence could be used against him.
12.
Secondly, Mr Rafiq had a right against self-incrimination. As far as any
prejudice was concerned, HMRC already held the money representing the VAT
treated as due from ABL. In these circumstances, any delay in the Tribunal
appeal proceedings would prejudice Mr Rafiq. No prejudice at all would be
suffered by HMRC.
13.
It might be argued on HMRC’s behalf that what Mr Rafiq faced did not
amount to criminal proceedings. This would be artificial. There were two
stages, ie the investigation and court proceedings. The HMRC argument lost its
force when the bail conditions imposed on Mr Rafiq were examined. The result of
the investigation could be that no further action was taken, or that Mr Rafiq
might be charged.
14.
The submissions for ABL were given added force by the fact that HMRC, as
the Respondents before the Tribunal, were also the prosecuting authority in the
criminal proceedings. It was therefore almost inevitable that any evidence
given in the Tribunal appeal would be used by HMRC in that other capacity. Mr
Ashiq submitted that if HMRC were to be asked as to their intended further
actions in relation to the possible prosecution, they would decline on the
grounds that this would prejudice their investigation; however, they would say
that Mr Rafiq was not prejudicing his position.
15.
This was the nub of the application; if Mr Rafiq was fortunate and the
investigation was discontinued, any information gathered by the HMRC Criminal
Investigation team might shed further light on this appeal. It was clearly
important that the Tribunal had a witness who could give evidence unshackled, in
the interests of justice both to ABL as Appellant and to HMRC as Respondents.
16.
HMRC’s notice of opposition to the application did not demonstrate any
prejudice to HMRC. Mr Ashiq emphasised that ordinarily ABL would want matters
to be resolved as soon as possible. HMRC had not yet made the decision whether
Mr Rashiq would or would not be charged.
Arguments for HMRC
17.
Mr Singh referred in detail to the judgment of the Court of Appeal in Mote
v Secretary of State for Work and Pensions [2007] EWCA Civ 1234. It was
clear from Mote and from the authorities cited by Richards LJ that the
Tribunal had a real discretion whether or not to stay proceedings. (I consider
as necessary below the various parts of that judgment to which Mr Singh drew my
attention.)
18.
It had been claimed on ABL’s behalf that continuing with the appeal
rather than waiting for the decision as to whether or not Mr Rafiq was to be
prosecuted would “seriously prejudice” his position. Mr Singh submitted that
this claim was wholly unfounded. There were no criminal proceedings in the
sense of a criminal charge against Mr Rafiq. Mr Rafiq had been arrested in 2011
on suspicion of a conspiracy to cheat the public revenue, but had not been
charged with that or any other offence. He was not due to be interviewed again
until 12 September, after the hearing listed for this appeal.
19.
Thus the Tribunal did not know whether any criminal proceedings would be
instituted. They might not be. This in itself was a powerful reason not to
delay the Tribunal appeal proceedings.
20.
If criminal proceedings were instituted, it would be necessary to
consider the precise nature of any such proceedings and the precise issues
raised by the present appeal. A related question was whether there would be any
overlap between the two. The offence for which Mr Rafiq had been arrested was
conspiracy to cheat; no allegation of any similar nature had been made against
Mr Rafiq in this appeal. Mr Singh emphasised that Mr Rafiq was not the
Appellant in these proceedings; he was a former director, and apparently a
shareholder. There was no allegation of dishonesty in the present case either
against ABL or against Mr Rafiq personally.
21.
The present appeal concerned 13 consignments of spirits which HMRC
contended had been delivered to ABL’s warehouse; HMRC’s case was that they were
not there when the warehouse closed in 2009. In the absence of evidence that
they had been released, or transferred to another warehouse, HMRC had concluded
that they had been released without payment of duty and VAT. HMRC were not
suggesting that duty and VAT were dishonestly evaded by ABL, Mr Rafiq, or
anyone else; there was no intention on HMRC’s part to make any allegation of
that kind. It followed that any evidence concerning fraud would be irrelevant
to the Tribunal proceedings. In any event, the Tribunal could exclude such
evidence on the basis that it would prejudice Mr Rafiq or ABL. Mr Singh
emphasised that HMRC were making no allegations of fraud in the Tribunal
proceedings. Their case was simply that ABL was unable to say that the duty and
VAT had been paid. He acknowledged that the duty assessment had been out of
time. Thus there was no overlap in issues between the Tribunal proceedings and
any criminal proceedings.
22.
Mr Ashiq had referred to the Tribunal proceedings being “part and
parcel” of the criminal investigation. Mr Singh commented that he was HMRC’s Counsel
in respect of ABL’s Tribunal appeal against the VAT assessment, and confirmed
that the criminal investigation formed no part of this tax appeal. No questions
of criminal culpability arose; the Tribunal would say that it was improper to
do so as no allegation of fraud had been made in the course of the Tribunal
proceedings against ABL or Mr Rafiq. There might be a bare factual similarity
between matters in the Tribunal proceedings and any criminal proceedings, as
ABL was the Appellant before the Tribunal and could possibly be referred to in
the criminal proceedings. However, there was no allegation of fraud in the
present appeal. It was very difficult to see how Mr Ashiq could say that it was
inevitable that findings in an appeal where there were no criminal allegations
could be used in criminal proceedings. This was nothing but speculation.
23.
Mr Singh submitted that even if there were a potential overlap, anything
decided by the Tribunal could be excluded by the trial judge; this was clear
from Mote. This power was not limited, as Mr Ashiq had argued; the trial
judge could exclude decisions of the Tribunal.
24.
It followed that ABL had not shown that proceeding with the Tribunal appeal
would result in any real danger of injustice in the context of criminal
proceedings. A secondary issue was that of possible prejudice; ABL had not
demonstrated that any prejudice would be suffered. It had not been shown that
proceeding with the Tribunal appeal would create a real risk in relation to
criminal proceedings.
25.
Mr Singh referred to other reasons for proceeding in the normal way with
the appeal hearing. A significant factor was that the application had been made
in August 2012, but Mr Rafiq had been arrested in September 2011 and therefore
ABL knew of the potential for criminal proceedings from that date onwards.
There was no good explanation why it had taken ABL 11 months to make the
application, which had been served only a few weeks before the date listed for
the hearing of the appeal. If the application had been made earlier, the
significant costs of preparation for the hearing could have been avoided. The
application had been made “too late in the day”.
26.
It was clear from Mote that there was a public interest in appeal
proceedings being determined within a reasonable time. To order a stay now
would cause a significant delay; this was not consistent with the “overriding
objective” as set out in Rule 2 of the Tribunal Rules. A stay would cause
prejudice to HMRC, who would like to have a decision within a reasonable time.
27.
Mr Singh emphasised that even if it were to be shown that there was no
prejudice to HMRC, the other factors which he had mentioned were more important
in deciding whether or not the proceedings should be stayed.
28.
In ABL’s Notice of Application, it had referred to consent being given
by HMRC’s Solicitor’s Office to the stay of proceedings in other cases. The
true position was that there had been only one such case, as mentioned in
HMRC’s Notice of Objection. The circumstances of that other case included the
significant factor that the appeal in question was at a very early stage,
rather than the advanced stage which ABL’s appeal had reached by the time of
its application. In any event, whether consent had been given in another case
was beside the point; the question was whether ABL’s application was
meritorious. HMRC’s submission was that it was not. Mr Singh submitted that for
the reasons which he had given, the application should be refused.
29.
In response to my question whether it was a significant part of HMRC’s
case that ABL as Appellant and Mr Rafiq were separate legal entities, Mr Singh
indicated that this was not a major part of his submission; there were no
allegations of a criminal nature against ABL or Mr Rafiq in this appeal.
Mr Ashiq’s reply
30.
In relation to the “legal entities” point, HMRC were saying that they
were making no allegations of dishonesty in the present proceedings. However,
the same authority, ie legal entity, was making allegations of that nature in
the context of the criminal investigation. At paragraph 25 of HMRC’s Statement
of Case for the Tribunal appeal, HMRC referred to the only conclusion capable
of being drawn, namely that after their receipt in ABL’s warehouse, the spirits
had been removed without payment of duty and VAT. In the criminal
investigation, the allegation concerned these and other goods, and was that
there had been a conspiracy to cheat the revenue; this was, effectively, theft.
Mr Singh’s submissions were merely that HMRC did not have to show dishonesty in
relation to the matters raised by the Tribunal appeal.
31.
In relation to the findings of the Tribunal, Mr Singh had misunderstood
ABL’s application. The findings of the Tribunal were not admissible in the
context of criminal proceedings, as they were findings. ABL’s application was
based on the evidence of Mr Rafiq, which of course would be admissible. It was
almost inevitable that a question would be put to him as to the whereabouts of
the goods.
32.
It was clear from Mote that the Tribunal Judge had a discretion.
All cases were fact-sensitive. The distinction between Mote and the
present case was that in Mote the application to stay the proceedings
was made after Mr Mote had been charged; the investigation had been completed.
Mr Mote was within the trial process, so that he could not be interviewed
again. The authorities showed that it was forbidden under the Police and
Criminal Evidence Act to interview again; it was unlawful.
33.
In the present case, matters were at the investigation stage. No
decision had been taken as to whether or not Mr Rafiq was to be charged. This
gave HMRC the power to ask Mr Rafiq questions, under caution, concerning any
answers given in the Tribunal proceedings. There was nothing stopping HMRC from
using any voluntary disclosure in the case against him.
34.
In criminal proceedings, the burden was on the prosecution. The accused
had a right of silence. The system was for a “defence case statement” to be
served. There was no such provision in the context of an investigation. This
went to the heart of the issue of potential prejudice in relation to Mr Rafiq.
35.
Mr Ashiq referred to Mote at [27], which considered forfeiture
proceedings; these tended to be adjourned. The position described at [28] was
similar to that in the present case. It tended to be the same authority which
was both prosecutor and seeking forfeiture. Mr Singh’s submissions had force if
the prosecuting authority was totally different from the authority involved in
the other proceedings. The fundamental point was that referred to in Mote
at [31] concerning a real risk of prejudice to the defendant in criminal
proceedings. It was necessary for the court to decide whether there was real
prejudice. Discretion was conferred on the Tribunal, as the issue was
fact-sensitive.
36.
Mr Ashiq accepted that the application should have been made earlier,
but the lateness should not detract from its merits. The issue was related to
forfeiture proceedings, where no prejudice was regarded as suffered. This was
exactly the position here.
37.
Mr Singh had referred to costs. Mr Ashiq submitted that these would have
been incurred in any event. He accepted that there might have to be some delay
in the matter coming back before the Tribunal. However, no extra cost would be
incurred by reason of the adjournment.
38.
Mr Ashiq did not seek to rely on the reference in the Notice of
Application to the granting of stays in the context of other cases. He sought
to amend the terms of the application; instead of referring to a specified
period, he requested that there should be a stay of proceedings to a date after
Mr Rafiq’s return to the police station. Once this occurred, there was no
further evidence and HMRC decided that there should be no further action, the
appeal could take place. If instead Mr Rafiq was charged, the Tribunal would
have a new consideration; there would have to be an application for the hearing
of the appeal on a different date. The position would depend on the merits at
the time. If Mr Rafiq were to be charged, the point concerning him being
subject to further interview would of course fall away.
39.
Mr Singh’s view on Mr Ashiq’s amended application was that it did not
affect HMRC’s submissions. If the hearing of the substantive appeal were to be
postponed, the practicalities of listing meant that it could not be heard
during the current year.
Discussion and conclusions
40.
Mote concerned a decision by the Social Security Appeal Tribunal
not to adjourn a hearing of Mr Mote’s appeals in respect of housing benefit and
income support by reason of criminal proceedings instituted against him after
the bringing of his appeals but before the date listed for the hearing of those
appeals. Richards LJ referred at [13]-[15] to the Tribunal Chairman’s decision:
“[13] . . . On the face of it, therefore, the
chairman had a broad discretion whether or not to proceed with the hearing. He
gave detailed reasons for his decision not to adjourn.
[14] He said first that there might well be cases in
which it would be preferable for social security appeals to await the outcome
of a related criminal prosecution, but whether or not that was so would depend
on the circumstances of each case and in particular the precise nature of the
criminal charges and the precise issues raised by the appeal.
[15] He then examined the extent of overlap between
the issues in the criminal proceedings and in the tribunal proceedings. In
summary, he said that the criminal court would be concerned with the question
of dishonesty, which was wholly irrelevant to the tribunal proceedings; and
that the tribunal was concerned with entitlement to benefit, whereas it would
be no answer to the criminal charges for the appellant to say that he had not
gained by any deception because he had not been paid any benefit to which he
was not entitled: the question of entitlement would at most be relevant to
mitigation. So the issues were separate.”
41.
After setting out further elements of the Tribunal Chairman’s
conclusions, subsequently upheld by the Social Security Commissioner, Richards
LJ reviewed the submissions of Mr Mote’s Counsel “in the light of a substantial
line of authority concerning the relationship between concurrent civil and
criminal proceedings”. The authorities concerned are considered in his judgment
at [21]-[32]. The principles may be summarised as follows:
(1)
The exercise of the discretion to stay or adjourn the civil proceedings
to await the outcome of a criminal prosecution should take into account whether
there is a real danger of causing injustice in the criminal proceedings.
(2)
A relevant consideration in the exercise of the discretion is whether
the continuation of the civil proceedings will give rise to a real risk of
prejudice to the defendant in the criminal proceedings. If there is a risk of prejudice,
it may be expected to weigh heavily in favour of a deferment of the civil
proceedings pending the conclusion of the criminal proceedings.
(3)
The privilege against self-incrimination is a privilege against being
compelled on pain of punishment to provide evidence or information, and the
privilege does not give rise to a defence in civil proceedings or to a right
not to plead a defence in civil proceedings.
(4)
There is no right to silence in the context of civil proceedings. The
requirement to give details of a positive defence at an early stage in criminal
proceedings means that disclosure of a defence in civil proceedings is unlikely
to disadvantage a defendant in criminal proceedings.
(5)
Although the reasoned decision or judgment in civil proceedings would be
available to the prosecuting authorities, no reliance can be placed on it in
the criminal trial so as to prove the guilt of the defendant.
(6)
Where forfeiture proceedings and criminal proceedings are in progress at
the same time, liaison between the authorities concerned is essential to ensure
that the fair trial of a defendant is not prejudiced by anything arising in the
civil proceedings, and steps should be taken accordingly.
(7)
No material change of approach in this area is required by reason of the
coming into force of the Human Rights Act 1998.
42.
This Tribunal’s powers in relation to a stay of proceedings are
conferred by Rule 5 of the Tribunal Rules, and in particular Rule 5(3)(j). In
the same way as under the then Regulations applicable in Mote, the terms
of the discretion under Rule 5(3)(j) are broad; there is no specific guidance
provided by the Tribunal Rules. As in the various cases referred to by Richards
LJ in Mote, the exercise of the discretion has to be based on the facts
and circumstances of the particular case.
43.
The first practical issue in relation to the facts is that the appeal
before this Tribunal is made by ABL rather than by Mr Rafiq. HMRC did not seek
to rely on the distinction between the respective legal persons concerned in
the respective proceedings. There was no suggestion before me that there was
any prospect of ABL being subjected to criminal proceedings. I have therefore considered
the issue on the basis that it is Mr Rafiq, rather than ABL, who is the
possible subject of criminal proceedings.
44.
In the case of a “small company” wholly owned by one individual and run
by that individual and one other director, I do not consider that the company
and its director should be regarded for the purposes of this type of
application as totally separate and distinct persons. In a colloquial sense, it
could be said of Mr Rafiq that he and ABL are in effect, in the context of
ABL’s activities, the same person. Whether this would be the same in other
cases would depend on the precise facts and circumstances relating to the
ownership and management of the company concerned. In relation to ABL, I accept
Mr Ashiq’s submission that ABL does not exist in a vacuum, and that Mr Rafiq’s
evidence is potentially significant in the context of ABL’s appeal to this
Tribunal on the substantive issue of the VAT assessment.
45.
I therefore approach the application on the basis that Mr Rafiq is
concerned both with the civil proceedings before this Tribunal and possible
criminal proceedings consequent on the investigations which have continued
following his arrest on suspicion of conspiracy to cheat the public revenue.
46.
Leaving aside for the present Mr Singh’s submission concerning the
absence of any charge having been made against Mr Rafiq, the question is
whether continuing with the substantive appeal before this Tribunal would give
rise to a real risk of prejudice to Mr Rafiq as a defendant in criminal
proceedings.
47.
I accept Mr Singh’s submission that no allegation of dishonesty against
Mr Rafiq or ABL is raised by the appeal to this Tribunal, and that the issues
raised by the appeal are distinct from those involved in the suspected offence
of conspiracy to cheat. No allegation of fraud has been made against either ABL
or Mr Rafiq in the context of the VAT appeal. I therefore agree that it is most
unlikely that any findings in relation to the VAT appeal could be used in
relation to any criminal proceedings. In any event, there are safeguards. Any
evidence which might suggest fraud or dishonesty could be excluded from the
Tribunal’s consideration. Where fraud or dishonesty have not been pleaded, it
would in any event be inappropriate to admit such evidence. Further, as
mentioned by Richards LJ in Mote at [31], the judge in the criminal
proceedings could limit the evidence admitted at the trial if this was
necessary to prevent a breach of Convention rights or to ensure a fair trial.
48.
As Mr Singh stated, no charges had been made against Mr Rafiq. This written
decision is being prepared at a point after the hearing of the substantive appeal
and after the date on which Mr Rafiq was due to attend the police station; no
information has been provided to the Tribunal to indicate whether or not Mr
Rafiq has been charged with any criminal offence. I therefore deal with this
decision by reference to the same limited information as was available at the time
of the application hearing.
49.
Mr Ashiq accepted that the findings of the Tribunal would not be
admissible in any criminal proceedings. However, he submitted that until any
charges were made against Mr Rafiq, the evidence which Mr Rafiq gave in the
context of the Tribunal proceedings would be admissible in criminal proceedings,
and that in particular Mr Rafiq would almost inevitably be questioned about the
whereabouts of the goods. While matters remained at the investigation stage,
HMRC could therefore ask Mr Rafiq questions about any answers given in relation
to the Tribunal proceedings.
50.
Mr Ashiq’s submission was based on Mote, in which the application
to adjourn the proceedings had been made after Mr Mote had been charged and the
criminal investigations had been completed. Although this was the case in Mote,
the position was different in one of the cases referred to by Richards LJ. In V
v C [2001] EWCA Civ 1509 the defendant “also faced a criminal investigation
and possible criminal proceedings in respect of the same matters” (Mote
at [23]). It is clear from V v C at [4] that charges were not brought
against Mr C until after the hearing by McCombe J of the appeal against the
decision of Master Miller to dismiss the claimant’s application for summary
judgment against Mr C. On the basis of the views of the Court of Appeal in V
v C and in Mote, I do not accept Mr Ashiq’s distinction between the
position after the relevant person has been charged and that before any charges
have been brought.
51.
My decision reached at the end of the application hearing was to refuse
the application. I did not consider that the matters to be dealt with in the
course of ABL’s VAT appeal would be prejudicial to any criminal proceedings
which might be brought against Mr Rafiq. In any event, it was not clear whether
Mr Rafiq was likely to be charged.
52.
In arriving at my decision, I was strongly influenced by the delay
between notification of the criminal investigation and the date of the
application, which (as Mr Singh submitted) was made very late in the day. In
this respect, an application made at a much earlier stage might have been
viewed as having a greater chance of being granted, but I must emphasise that
any such application must still meet all the other tests considered in this
decision, and unless it fulfils the necessary conditions having regard to the
particular circumstances of the case in question, it will not be accepted as a
basis for deferring the proceedings relating to that appeal.
53.
My decision was also made in accordance with the overriding objective,
as specified in Rule 2 of the Tribunal Rules; I did not consider it to be in
the interests of justice for the appeal to be delayed.
54.
In the course of preparing this decision I have reviewed the factors to
be taken into account in exercising my discretion under Rule 5(3)(j), and I am
satisfied that there are no reasons for departing from the terms of my decision
as expressed to the parties at the conclusion of the hearing.
55.
Mr Ashiq referred to the costs incurred by HMRC in preparing for the
substantive hearing, and argued that these would have been incurred in any
event, whether or not the application for a stay of proceedings was granted. I
am not satisfied that this is the case. If a stay is granted and the appeal
resumes after the relevant criminal proceedings have been concluded, the papers
originally prepared will have to be revisited and reviewed, which in itself
will involve the expenditure of time and money. Further, it may not be possible
for the same Counsel to deal with the appeal, so that cost will be incurred in
instructing someone else to prepare for the substantive hearing. The decision
whether or not to pursue the appeal after the end of the criminal proceedings will
be in the hands of the relevant appellant rather than HMRC. That appellant may
not wish to continue with the appeal, and therefore HMRC cannot assume that their
original expenditure will turn out to have been a contribution towards the
costs of a future hearing.
56.
For all the above reasons, I confirm my decision to refuse ABL’s
application for a stay of the proceedings in respect of its VAT appeal.
Right to apply for permission to appeal
57.
This document contains full findings of fact and reasons for the
decision. Any party dissatisfied with this decision has a right to apply for
permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure
(First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be
received by this Tribunal not later than 56 days after this decision is sent to
that party. The parties are referred to “Guidance to accompany a Decision from
the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this
decision notice.
JOHN CLARK
TRIBUNAL JUDGE
RELEASE DATE: 26 September 2012
