Court of Appeal decision on burden of proof in penalty appeals
The Court of Appeal has upheld HMRC’s appeal in HMRC v Sintra Global, Inc & Malde [2025] EWCA Civ 1661, holding that where a taxpayer seeks to appeal a penalty by challenging the underlying tax decision on which that penalty is based, the taxpayer has the burden of proof in relation as to whether that underlying tax decision is correct. The case is of broader importance as to the burden of proof in appeals against civil penalties which engage Article 6 of the ECHR.
The substantive proceedings related to companies alleged to be involved in the fraudulent diversion of alcohol into the UK from the EU between 2004 and 2014. The First-tier Tribunal had been unable to determine whether Sintra Global, Inc had owned goods that were supplied in the UK and hence the appeals which rested on that issue would be determined by the location of the burden of proof. The First-tier Tribunal, and the Upper Tribunal on appeal, decided that HMRC held the burden of proof on that issue for the purposes of the penalty appeal, and hence the appeals against the penalties were allowed.
The Court of Appeal held that the ordinary rule that the taxpayer bears the burden of proof in relation to tax assessments applies where that issue arises in the context of a penalty appeal. Article 6 of the ECHR did not require HMRC to bear the burden of proof on the substantive tax issue just because it was the foundation on which a subsequent penalty had been issued. The appeal was remitted to the First-tier Tribunal.
Sam Way appeared for HMRC, led by Ben Hayhurst of 187 Chambers.
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