HMRC v Sintra Global Inc & Parul Malde [2025] EWCA Civ 1661: The Court of Appeal Clarifies the Burden of Proof on Underlying Tax Liabilities in Civil Penalty Appeals

1. Introduction

The decision in Commissioners for His Majesty's Revenue and Customs v Sintra Global Inc & Anor [2025] EWCA Civ 1661 addresses a fundamental and previously unsettled question: when a taxpayer appeals a civil tax penalty and argues that the underlying tax liability is wrong, who bears the legal burden of proof on that underlying liability?

The issue arises in the context of:

• Penalties imposed under Schedule 24 Finance Act 2007 and Schedule 41 Finance Act 2008 (the modern “behaviour-based” penalty regimes); and
• Director / officer liability notices (PLNs and DLNs) making individuals personally liable for corporate penalties.

The respondents were:

• Sintra Global Inc (“Global”), a Panamanian company involved in large-scale alcohol trading; and
• Mr Parul Malde, a UK-resident businessman and controller of Global and its Belizean predecessor, Sintra SA (“SA”).

HMRC alleged that SA and Global participated in “inward diversion fraud” in the alcohol sector from 2004–2014, evading very substantial VAT and excise duty by diverting goods back into the UK market without payment of UK taxes. On the back of those allegations HMRC:

• Assessed SA and Global for VAT and excise duty;
• Imposed penalties totalling over £30 million; and
• Issued DLNs/PLNs to make Mr Malde personally liable for those penalties.

Global and Mr Malde appealed to the First-tier Tribunal (Tax Chamber) (“FTT”). The FTT allowed all appeals. HMRC then appealed to the Upper Tribunal (“UT”), which:

• Upheld the FTT on the crucial point that, in penalty appeals, HMRC bore the burden of proving the correctness of the underlying tax liability where put in issue (and declined to follow the UT’s earlier decision in HMRC v Zaman [2022] UKUT 252 (TCC)); but
• Found errors of law in the FTT’s approach to evidence and to the “best of judgment” VAT assessment underlying one of the penalties.

HMRC obtained permission for a second appeal to the Court of Appeal on three grounds:

1. Ground 1: Burden of proof on underlying tax liability in penalty appeals.
2. Ground 2: The UT’s treatment of Global’s separate “liability to register” appeal as subsumed within the registration penalty appeal.
3. Ground 3: Materiality of the FTT’s legal error in compartmentalising the evidence (particularly by excluding the “control” issue from its analysis of the place of supply).

The Court of Appeal (Henderson, Singh and Newey LJJ) allowed HMRC’s appeal on all three grounds, set aside the UT’s rulings so far as inconsistent, and ordered that all open appeals be remitted to the FTT for rehearing before a differently constituted panel.

2. Summary of the Judgment

2.1 The Core Holding: Burden of Proof in Penalty Appeals on “Underlying Tax” Issues

The central ruling lies in Henderson LJ’s answer to the key question at [1]:

Does the fact that civil tax penalty proceedings are “criminal charges” for Article 6 ECHR purposes require HMRC to prove the correctness of the underlying tax liability whenever the taxpayer puts that liability in issue in the penalty appeal?

The Court answered no. The key points are:

• General rule reaffirmed for tax assessments:
  • In appeals against assessments to tax (including VAT and excise), the legal burden lies on the taxpayer to displace the assessment and establish the correct amount of tax: [30], [41]–[42], [123]–[124].
  • This remains so even where HMRC allege fraud or dishonesty, unless the statute expressly provides otherwise.
• General rule in penalty appeals:
  • HMRC do bear the legal burden of proof on the bespoke penalty conditions – e.g. deliberate or careless behaviour, concealment, reasonable excuse, officer attribution for PLNs/DLNs: [31], [125]–[126].
  • This reflects the “criminal charge” nature of such penalties for Article 6 purposes.
• Crucial clarification:
  • Where, in penalty proceedings, a taxpayer chooses to challenge the underlying tax liability on which the penalty depends, a separate legal burden rests on the taxpayer in relation to that underlying tax component: [127]–[131], [143].
  • That burden mirrors the burden the taxpayer would bear in a direct appeal against the assessment itself.

In formal terms, Henderson LJ states at [130] (paraphrased):

In penalty proceedings the burden normally lies on HMRC to establish the primary facts needed to justify the penalty. But if the taxpayer contends, by way of defence, that the underlying tax liability on which the penalty is based is wrong, a separate legal burden rests on the taxpayer to prove that, just as in an appeal against the assessment.

This principle is to be declared and is the new binding clarification that structures the interaction between tax liability and penalties under the FA 2007/2008 regimes.

2.2 Article 6 ECHR and Severability

The Court:

• Reaffirmed that ordinary tax disputes fall outside Article 6 altogether (Ferrazzini v Italy): [63]–[65], [120].
• Confirmed that tax penalties under s 60 VATA, Sch 24 FA 2007 and Sch 41 FA 2008 amount to “criminal charges” for Article 6(1) and attract Article 6(2): [66]–[76], [120].
• Applied the Strasbourg jurisprudence in Georgiou, Janosevic and Jussila to hold that, where possible, the “criminal” elements (penalty conditions) and “non-criminal” elements (pure tax liability) should be separated (“severed”) for Article 6 purposes: [67]–[68], [73], [76], [121]–[123], [132]–[134].

Thus, the underlying tax liability is treated as a “pure tax” matter, excluded from Article 6, even when raised inside penalty proceedings, unless it is so inextricably linked that severance is impossible. In the Sintra context, the Court considered severance plainly possible.

Even if Article 6(2) were engaged in respect of underlying liability, the Court held (in the alternative) that imposing a reverse legal burden on taxpayers for this element would be reasonable and proportionate within the principles laid down in Sheldrake and Euro Wines: [131], [136]–[137].

2.3 Zaman Vindicated; Euro Wines Limited

The UT decision in HMRC v Zaman had held that taxpayers bear the burden of displacing an underlying assessment when using it as a defence to a PLN. The UT below had dismissed Zaman as “per incuriam” and wrong: [3], [44], [114]. The Court of Appeal:

• Held that, in substance, Zaman was correctly decided on the core point: [4], [140].
• Rejected the UT’s “per incuriam” label as unnecessary and inappropriate: [140]–[141].
• Accepted that Zaman blurred “legal” and “evidential” burdens, but treated this as a matter of language rather than substance: [102], [140].

By contrast, the Court disapproved, as mistaken obiter, the dicta of David Richards LJ in Euro Wines (C&C) Ltd v HMRC [2018] 1 WLR 3248 at [7], insofar as they suggested that HMRC bore the burden of proof on the basic para 4(1) Sch 41 ingredients of an excise penalty (acquisition/handling of goods on which duty was unpaid): [126], [139].

2.4 Ground 2: Registration Decision vs Registration Penalty

The UT had treated Global’s appeal against HMRC’s decision that it was liable to be registered for VAT as “subsumed” within its appeal against the registration penalty, on the basis that the practical issues overlapped: [125]. Henderson LJ held this to be an error:

• The registration decision was a separate appeal concerning a matter of substantive VAT liability (whether Global made taxable supplies in the UK above the registration threshold): [144]–[147].
• The penalty appeal concerned the consequences of that liability, with additional, penalty-specific conditions (e.g., deliberate and concealed conduct, behaviour categorisation, calculation of penalty rate): [146].
• The burden of proof in the registration appeal lay on Global (as in all liability appeals), irrespective of the penalty appeal: [145], [148].

Subsuming the registration appeal into the penalty appeal wrongly imported the “penalty” burden of proof logic into a pure tax liability question and risked undermining the long-established rule on the taxpayer’s burden in tax appeals.

2.5 Ground 3: Materiality of the FTT’s Error in Compartmentalising Evidence

The UT accepted that the FTT erred in treating the “place of supply” issue separately from the issue of whether Mr Malde controlled SA and Global: [52]. However, the UT regarded that error as immaterial because the FTT’s conclusions on place of supply purportedly did not depend on the control evidence.

The Court of Appeal disagreed:

• Materiality must be assessed on an objective basis: the question is whether the FTT might have reached a different conclusion absent the error, not whether the FTT in fact thought it unnecessary: [150]–[153].
• Control and place of supply were deeply interconnected. Evidence that Mr Malde controlled and orchestrated SA and Global’s activities would have heavily undermined his primary defence that he lacked knowledge, control and documentation: [33], [52], [152].
• The FTT “disabled” itself from considering the totality of the evidence by ring-fencing control from the place of supply inquiry: [52], [152].

Accordingly, the compartmentalisation error was material, and the appeals had to be remitted for a full re-hearing.

3. Detailed Analysis

3.1 Precedents Cited and Their Influence

3.1.1 Ferrazzini v Italy and the “Hard Core of Public Authority”

In Ferrazzini v Italy (44759/98) [2001] STC 1314, the Grand Chamber held that ordinary tax disputes fall outside the “civil rights and obligations” limb of Article 6(1): [63]–[65]. Tax matters form part of the “hard core of public authority prerogatives” and the public nature of the relationship predominates.

This is the foundation for the Court of Appeal’s distinction between:

• Underlying tax liability disputes – outside Article 6; and
• Penalty proceedings – potentially within the “criminal charge” limb of Article 6(1) and subject to Article 6(2).

Henderson LJ repeatedly returns to Ferrazzini at [120]–[123] in order to emphasise that liability to VAT (including VAT registration) and excise duty remains a “pure tax” matter even when it is relevant to penalties.

3.1.2 Georgiou, Janosevic and Jussila: The “Severability” Approach

The Strasbourg cases of Georgiou v UK [2001] STC 80, Janosevic v Sweden (2004) 38 EHRR 22 and Jussila v Finland [2009] STC 29 are pivotal. They establish:

• Penalty regimes can be “criminal” even if domestic law labels them civil or administrative:
  • Georgiou: VAT civil evasion penalties under s 13 FA 1985 (equivalent to s 60 VATA) were “criminal charges” because of their punitive and deterrent purpose and magnitude: [67].
  • Janosevic and Jussila: Swedish tax surcharges were likewise “criminal” despite their modest size: [72]–[76].
• Severability of criminal and non-criminal aspects:
  • The Court in Georgiou and Janosevic accepted that where proceedings involve both tax and penalty issues, it may not be possible to fully separate them; however, the court will consider the proceedings “to the extent” that they determine a criminal charge, even though that may “necessarily involve the ‘pure’ tax assessments to a certain extent”: [67]–[68], [73], [76].
• “Criminal” but not “hard core” criminal:
  • In Jussila, the Grand Chamber stated that tax surcharges are not part of the “hard core” of criminal law, and therefore the Article 6 “criminal head guarantees” may not apply with their “full stringency”: [75]–[76].

Henderson LJ uses these authorities to justify:

• An insistence that underlying tax liability remains non-criminal, even when litigated in penalty proceedings; and
• A structured approach that applies Article 6 only to the genuinely “criminal” attributes of the penalty (e.g. culpable behaviour, quantum, officer attribution), not to the tax liability itself: [121]–[123], [132]–[134].

3.1.3 Sheldrake: Reverse Burdens and the Presumption of Innocence

Sheldrake v DPP [2005] 1 AC 264 remains the leading domestic authority on reverse burdens in criminal contexts. Lord Bingham’s summary at [21], adopted by Henderson LJ at [81]–[82], is critical:

The Convention does not outlaw presumptions of fact or law but requires that these should be kept within reasonable limits and should not be arbitrary. The substance and effect of any presumption adverse to a defendant must be examined and must be reasonable… Relevant to any judgment on reasonableness or proportionality will be the opportunity given to the defendant to rebut the presumption, maintenance of the rights of the defence, flexibility in application of the presumption, retention by the court of a power to assess the evidence, the importance of what is at stake and the difficulty which a prosecutor may face…

The Court of Appeal applies this framework to:

• Evaluate HMRC’s argument that even if Article 6(2) applied to underlying liability components, a reverse burden on taxpayers would nevertheless be compatible with the presumption of innocence; and
• Conclude that, in any event, such a reverse burden is reasonable and proportionate given the nature of tax collection, the taxpayer’s special knowledge of their own affairs, and the existing procedural safeguards: [136]–[137].

3.1.4 Euro Wines: Reverse Burden on “Duty Paid” and Its Limits

In Euro Wines (C&C) Ltd v HMRC [2018] 1 WLR 3248, the Court of Appeal upheld the compatibility of s 154(2) CEMA 1979, which places the burden on the person dealing with excise goods to prove that duty has been paid: [83]–[86].

Euro Wines is important in Sintra for two reasons:

• It confirms that reverse burdens in tax-penalty contexts can be Article 6-compatible if proportionate: [86], [136].
• However, Henderson LJ disapproves an obiter passage at [7] where David Richards LJ indicated that HMRC bears the burden of proof on all other para 4(1) Sch 41 excise-penalty elements (e.g. acquisition, carriage, excise duty point): [126], [139]. Henderson LJ holds this was not in issue in Euro Wines, was not necessary to the decision, and is wrong in principle if taken to shift the underlying liability burden to HMRC.

3.1.5 Khan (Greyhound Dry Cleaners), Brady and Awards Drinks: The Taxpayer’s Burden

Khan (t/a Greyhound Dry Cleaners) v HMRC [2006] STC 1167 is the Court’s key domestic authority on burden of proof in VAT and penalty appeals under the old s 60 VATA regime. Carnwath LJ held:

• On a “best of judgment” VAT assessment, the burden is on the taxpayer to show that the assessment is wrong and what the correct figure is: [88]–[89] (quoting Bi-Flex, affirmed in Pegasus Birds).
• This burden does not shift merely because fraud is alleged: [41]–[42].
• As to penalties under s 60, the statute expressly placed the burden on HMRC for certain elements (intention to evade and dishonesty) via s 60(7). For other aspects – especially quantum of tax evaded – the burden still lay with the taxpayer; the presumption of innocence justified HMRC’s burden on evasion/dishonesty but not on the amount of tax: [89]–[90].

Henderson LJ holds that Carnwath LJ’s discussion of burden in Khan is part of the ratio and binding on the Court: [91]. He also emphasises the general principle Carnwath LJ articulated at [70] of Khan (quoted at [88]–[89]):

Where a statute gives a right of appeal against enforcement action taken by a public authority, the burden of establishing the grounds of appeal lies on the person appealing.

This principle is further reinforced by:

• Brady v Group Lotus Car Companies [1987] STC 635: Mustill LJ’s reiteration that the taxpayer bears the burden of displacing an assessment, and his clear explanation of the difference between legal and evidential burdens (picked up in Doorstep Dispensaree and by Henderson LJ at [102]).
• Awards Drinks Ltd v HMRC [2021] EWCA Civ 1235, where Henderson LJ (in a non-penalty context) had previously suggested Carnwath LJ’s observations might be technically obiter. In Sintra, he explicitly retracts that caveat and accepts that Khan’s reasoning on burden is binding: [30], [41], [91].

3.1.6 Doorstep Dispensaree: Burden on the Appellant in Civil Penalty Appeals

In Doorstep Dispensaree Ltd v Information Commissioner [2024] EWCA Civ 1515 the Court of Appeal held that, on an appeal under s 162 Data Protection Act 2018 against a civil monetary penalty, the burden of proof lay on the appellant, even though the appeal was a full merits review “afresh”: [92].

Newey LJ drew on Khan and planning authorities like Nelsovil and Hill to confirm the general rule that appellants must prove their case on appeal against regulatory enforcement. Henderson LJ treats Doorstep Dispensaree as part of the same jurisprudential strand supporting the taxpayer’s burden in appeals against HMRC enforcement action, unless statute says otherwise: [92].

3.1.7 Omagh Minerals: Article 6 Applied Only to Penalty Part

In Omagh Minerals Ltd v HMRC [2018] UKFTT 697, the FTT (Judge Brannan) considered whether Article 6 applied to an aggregates levy assessment and associated penalty under para 9 Sch 6 FA 2001.

The FTT held:

• Only the penalty proceedings were “criminal” for Article 6 purposes.
• The assessment appeal remained a non-criminal tax dispute, and the burdens remained as in ordinary tax appeals (i.e. on the taxpayer): [94]–[96].
• It would be undesirable if the application of Article 6 to tax liability depended arbitrarily on whether the assessment appeal happened to be heard concurrently with the penalty appeal: [96].

Henderson LJ approves this reasoning and uses it to criticise the UT’s attempt in Sintra to treat the penalty appeal as altering the burden in a concurrent or related tax liability appeal: [96], [120]–[123], [132]–[134].

3.1.8 Zaman: The Immediate Precursor

Finally, HMRC v Mohammed Zaman [2022] UKUT 252 (TCC) directly anticipated the issue in Sintra. There:

• A company, Zamco, had been assessed for under-declared VAT. Zamco did not appeal the assessment or the penalty under Sch 24 FA 2007. HMRC then issued a PLN to Mr Zaman, the sole director, making him liable for the company’s penalty.
• The FTT allowed Mr Zaman’s appeal, on the basis that HMRC had not proved their case as to the place of supply. The FTT treated the burden in the PLN appeal as lying entirely on HMRC.
• The UT allowed HMRC’s appeal, holding that once HMRC had shown the PLN was validly issued, the burden lay on Mr Zaman to show that the underlying VAT assessment on Zamco was wrong, just as Zamco would have had to do if it had appealed: [97]–[101].

The UT below in Sintra had refused to follow Zaman, describing it as per incuriam and wrong: [3], [44], [114]. Henderson LJ reverses that assessment: Zaman captured, “in substance”, the correct legal position; its language conflating evidential and legal burdens is clarified by reference to Sheldrake and Brady; and it is not per incuriam even though it did not refer expressly to Article 6: [97]–[102], [140]–[141].

3.2 The Court’s Legal Reasoning

3.2.1 The Three “Types” of Penalty Proceedings

Henderson LJ usefully structures HMRC’s arguments by identifying three practical patterns in which tax penalties are litigated: [103]–[107].

1. Type 1: Penalty after underlying tax liability finally determined
   Where assessments have already been determined in separate proceedings (or not appealed) before penalties are imposed:
   • The penalty appeal cannot revisit the underlying tax liability, absent abuse of process or issue estoppel considerations (Johnson v Gore Wood; Kishore): [104].
   • Article 6 applies only to the penalty component.
2. Type 2: Concurrent tax and penalty appeals
   Where the tribunal hears appeals against both:
   • Tax assessments (or registration decisions); and
   • Associated penalties (including PLNs/DLNs).
   Here:
   • The tax appeal is determined first, with the burden on the taxpayer: [105].
   • Only if HMRC succeed on liability does the tribunal move on to penalty conditions, for which HMRC bear the burden.
3. Type 3: Penalty appeal where there has been no tax appeal
   For example:
   • Company went into liquidation and did not appeal the assessment;
   • Taxpayer was blocked by failure to meet “hardship” conditions for appealing an assessment (as with Global here: [22]).
   In this case:
   • The taxpayer faces only the penalty appeal but may seek to challenge the underlying liability as part of their defence; the question is where the burden lies on that challenge.

Sintra is essentially a Type 3 case in relation to the company assessments (Global and SA) and the PLNs/DLN. The Court’s principal task is to determine how burdens should operate coherently across these types, without creating anomalies or perverse incentives.

3.2.2 The Key Concern: Avoiding Anomalies and Perverse Incentives

At [128]–[130], the Court sets out the policy and systemic reasons for requiring the taxpayer to bear the burden of proof on underlying tax liability even in penalty appeals:

• Consistency with the fundamental tax appeal rule:
  • It is long-established that taxpayers must displace assessments.
  • Placing the burden on HMRC on underlying liability only when the issue is raised in penalty appeals would indirectly undermine that general principle: [123], [128]–[129].
• Risk of inconsistent outcomes:
  • The same underlying liability issue could be decided differently depending solely on the procedural route by which it comes before the tribunal (direct tax appeal vs penalty appeal), which is undesirable.
• Risk of strategic non-appeals by taxpayers:
  • If the underlying liability burden falls on the taxpayer in a direct tax appeal but on HMRC in penalty proceedings, taxpayers might deliberately refrain from appealing assessments, especially on insolvent or offshore companies, and instead wait to challenge the liability only when faced with a PLN/DLN where HMRC would then bear the burden: [129].
• The taxpayer’s informational advantage:
  • The taxpayer (or controlling officer) is generally better placed to adduce evidence about the facts of trading, place of supply, ownership, documentation, etc. This is precisely why the tax appeal burden lies with them.

Against this backdrop, the Court identifies a coherent solution: split the burdens:

• HMRC bear the legal burden on:
  • All penalty-specific ingredients (deliberate/careless, concealment, reasonable excuse, officer attribution, calculation and mitigation of penalties); and
  • Any statutory elements which Parliament explicitly places on HMRC (e.g. s 60(7) VATA on dishonesty, s 154(2) CEMA in reverse-burden form for “duty paid”).
• The taxpayer bears the legal burden on:
  • Any challenge to the underlying tax liability, i.e. VAT owing, registration status, excise liability, quantum of “potential lost revenue”, etc., which mirrors the burden in a pure tax appeal.

3.2.3 Article 6 and Severability in Practice

The Court applies the “severability” model to the FA 2007/FA 2008 regimes:

• Registration penalty (Sch 41 FA 2008):
  • Underlying tax component: Global’s failure to notify liability to register for VAT (turnover threshold/supplies in UK). This is a pure tax liability question, severable and outside Article 6: [132]–[133].
  • Penalty-specific component: categorisation of behaviour as “deliberate and concealed”, calculation of penalty percentage, and officer attribution in the PLN. These engage Article 6 and are for HMRC to prove: [125], [135].
• Inaccuracy penalty (Sch 24 FA 2007):
  • Underlying components: submission of a document (here a VAT return) containing an inaccuracy that leads to a loss of tax. These directly reflect underlying VAT liability questions and are severable: [133].
  • Penalty component: the inaccuracy being “careless” or “deliberate”. This is a culpability element squarely within Article 6 and on HMRC: [133].
• Excise duty penalty (Sch 41 FA 2008):
  • Underlying component: para 4(1) conditions (acquisition/handling/etc of excise goods after duty point while duty remains unpaid). This mirrors excise duty liability and is treated as severable, with the burden on the taxpayer if he wishes to contest it: [16], [134], [139].
  • Penalty components: culpability classification (deliberate/concealed etc), any “reasonable excuse” defence. HMRC has the burden on culpability; the taxpayer bears the burden on reasonable excuse (as Parliament expressly provided): [135].

Thus, Article 6(2) does not “infect” the tax liability elements simply because they arise within penalty appeals.

3.2.4 The Court’s View of the UT’s Approach

The UT had reasoned that:

• Because penalty appeals are “criminal” for Article 6 purposes and because the presumption of innocence applies, HMRC must bear the burden on all issues in penalty appeals, including the correctness of any underlying assessment, unless a statutory exception exists or some other policy justification can be made: [43]–[45], [127]–[133].
• There was no sufficiently strong justification in Sintra to depart from this “general rule”.

Henderson LJ criticises this on several fronts:

• It conflates penalty-specific issues (which are criminal) with pure tax issues (which are not): [121]–[123].
• It fails to engage properly with the severability principle from Georgiou/Janosevic/Jussila and Omagh Minerals: [95]–[96], [121]–[123].
• It produces severe anomalies and perverse incentives as outlined at [128]–[130].
• It effectively reverses burdens that Parliament has not reversed and undermines well-settled case law such as Khan and Brady.

The Court concludes that, with respect, the UT’s analysis was flawed and that its broad statement at [112]–[114] could not stand.

3.3 Impact and Significance

3.3.1 Clarifying the Architecture of Burdens in Tax and Penalty Litigation

The judgment provides a clear, principled template:

• Assessments and tax liability decisions: burden on the taxpayer.
• Penalty conditions (behaviour, culpability, reasonable excuse exceptions where statute so provides, officer attribution, quantum calculation method): burden on HMRC (save for express statutory reverse burdens like s 154(2) CEMA or reasonable-excuse provisions where the taxpayer must “satisfy” the tribunal).
• Underlying tax liability raised as a defence in penalty appeals: burden on the taxpayer, just as in a direct tax appeal.

This is the first appellate articulation of this model in the context of the FA 2007/FA 2008 penalty regimes and PLNs/DLNs, and it will guide both HMRC and taxpayers in structuring litigation strategy.

3.3.2 Effects on HMRC Practice

For HMRC:

• The decision reduces the risk that they will be forced to prove the correctness of complex “best of judgment” assessments years after the event, simply because the issue is raised as a defence in penalty appeals (often against individuals rather than companies).
• It supports the practice of:
  • Issuing assessments and penalties; and
  • Relying on unappealed assessments as the starting point, unless the taxpayer discharges their own burden to displace them.
• In director liability cases (PLNs/DLNs), HMRC must still prove officer attribution and deliberate conduct, but can treat the company’s underlying tax position as presumptively correct unless the officer proves otherwise.

3.3.3 Effects on Taxpayer Strategy

For taxpayers and advisers, the message is stark:

• Failing to appeal an assessment (e.g. due to hardship, insolvency or tactical choice) does not give a “free shot” at reversing the burden via later penalty or PLN appeals.
• Where possible, taxpayers should challenge assessments and VAT registration decisions directly, rather than banking on later penalty litigation.
• In penalty appeals where underlying tax liability is contested, taxpayers must:
  • Adduce positive evidence and argument to displace the assessment; and
  • Recognise that “HMRC hasn’t proved its case” is not sufficient on its own for those liability elements.

3.3.4 Interaction with Article 6 and Future Human Rights Arguments

The judgment narrows the scope for using Article 6 to shift burdens in tax contexts:

• It confirms that Ferrazzini still decisively excludes underlying tax disputes from Article 6, even when they impact penalty amounts.
• The “criminal” classification of penalties does not turn related tax issues into criminal matters or automatically require the State to prove their correctness.
• Future challenges to reverse burdens in tax-penalty contexts will need to engage with the Sheldrake proportionality analysis carefully; where burdens align with the general tax-appeal structure, they are likely to be upheld.

3.3.5 Guidance to the Tribunals: Per Incuriam and Collegiality

The Court’s treatment of Zaman and the UT’s use of the term “per incuriam” is also significant institutionally:

• It confirms that the UT is not bound by its own decisions but should generally follow earlier decisions unless clearly wrong, as recognised in Gilchrist and in the UT’s own case law: [44], [114].
• However, the label “per incuriam” should be used sparingly and is not well-suited to tribunals of co-ordinate jurisdiction; it implies a more stringent doctrine that properly belongs to the doctrine of stare decisis between hierarchically organised courts: [140]–[141].

This will likely moderate the rhetoric used in UT decisions when disagreeing with earlier UT authorities.

3.3.6 The Practical Outcome: Rehearing Before a New FTT Panel

Because the Court allowed all three grounds of appeal, the practical consequence is sweeping:

• All open appeals (Global’s registration appeal and registration penalty, and Mr Malde’s PLNs and the DLN) are remitted to the FTT for rehearing, at least on the place of supply and related liability issues: [155].
• Given the misdirection on burdens and the materiality of the compartmentalisation error, the Court considers that a differently constituted FTT should hear the retrial, subject to submissions by the parties: [155].

The case will, therefore, return to the FTT for a fresh, holistic evaluation of the evidence (including control and place of supply) under the clarified burden rules.

4. Complex Concepts Simplified

4.1 Legal vs Evidential Burden of Proof

• Legal (or persuasive) burden:
  • The obligation to ultimately convince the tribunal of fact on an issue.
  • If the party with the legal burden fails to tip the balance (on the civil standard, “more likely than not”), they lose on that issue.
  • In tax appeals, the legal burden on underlying liability almost always lies on the taxpayer.
• Evidential burden:
  • The obligation simply to put forward enough evidence to raise an issue for the tribunal to consider.
  • Once that is done, the other side may carry the legal burden to disprove it.

Zaman (and some FTT decisions) sometimes referred to an “evidential burden” on taxpayers when what was really meant was a legal burden. Henderson LJ clarifies that, for underlying tax liability in penalty appeals, the burden is a true legal burden: [102].

4.2 “Best of Judgment” Assessments

Under s 73 VATA 1994 and s 12 FA 1994, HMRC can make “best of judgment” assessments when records are inadequate or absent. Key points:

• HMRC need not be exact; they may estimate based on available data.
• The assessment is prima facie valid and stands unless displaced by the taxpayer: [88]–[89].
• The FTT’s role is not to police HMRC’s judgement-making process in detail but to determine the correct amount of tax as far as possible on the evidence.

In Sintra, the FTT had tried to use “best of judgment” deficiencies in SA’s assessment as a reason to demolish the entire assessment, affecting the DLN on Mr Malde. The UT and Court of Appeal found legal errors in that approach, but those issues are largely confined to Ground 4/5 before the UT and the remitted DLN hearing: [54]–[55].

4.3 Article 6 ECHR in Tax Contexts

Article 6 protects:

• The right to a fair and public hearing in respect of:
  • civil rights and obligations; and
  • criminal charges.
• The presumption of innocence (Art 6(2)) for persons “charged with a criminal offence”.

In tax law:

• Ordinary tax assessments (liability to VAT, income tax, corporation tax, etc.) do not fall within Article 6 at all (Ferrazzini): [63]–[65], [120].
• Tax penalties, even if labelled civil domestically, are generally treated as “criminal charges” because of their punitive and deterrent nature, and may attract the full or partial suite of criminal procedure protections: [66]–[76].
• Courts distinguish between “hard core” criminal law (e.g. prison sentences) and tax-penalty “criminal” matters where not all guarantees (e.g. oral hearings) must always apply with full strictness (Jussila): [75]–[76].

Sintra illustrates how courts can ensure:

• Penalties receive appropriate Article 6 protection; but
• Pure tax issues do not become “criminalised” by association with penalty appeals.

4.4 Issue Estoppel and Abuse of Process in Sequential Litigation

Where assessments are determined (or not appealed) and penalties follow, taxpayers may wish to re-open liability in later penalty or PLN proceedings. The Court reiterates that:

• Johnson v Gore Wood and Kishore prohibit abusive re-litigation of issues that have been or should have been litigated: [104].
• If an assessment is final, the taxpayer will often be estopped or barred from disputing the underlying liability in later penalty proceedings.

Sintra is distinct because Global’s tax appeals were blocked by hardship rules rather than finally determined on the merits.

4.5 PLNs and DLNs: Making Officers Personally Liable

Under:

• s 61 VATA 1994 (DLNs); and
• para 22 Sch 41 FA 2008 and para 19 Sch 24 FA 2007 (PLNs),

HMRC can make directors or “officers” personally liable for corporate penalties where:

• The company’s penalty arises from deliberate conduct; and
• That conduct is attributable to the officer.

In Sintra:

• Mr Malde received:
  • a DLN for SA’s civil evasion penalty under s 60 VATA; and
  • PLNs for Global’s registration, inaccuracy and excise penalties under the FA 2007/2008 regimes.
• HMRC bear the burden of proving:
  • that the company incurred a penalty;
  • that its behaviour was deliberate (and concealed where alleged); and
  • that the officer’s dishonesty/deliberate conduct caused or is attributable to that behaviour.
• If the officer contends that the company had no underlying tax liability in the first place, the burden on that aspect lies with the officer: [125]–[127], [130], [134].

5. Conclusion: Key Takeaways and Broader Significance

The Court of Appeal’s decision in HMRC v Sintra Global Inc & Anor establishes a clear and now authoritative framework for the allocation of the burden of proof in civil tax penalty appeals where underlying tax liability is contested. The core propositions are:

1. Taxpayer’s burden on underlying tax liability
   Even in penalty appeals (including PLNs/DLNs), where the taxpayer argues that the underlying liability to VAT or excise is wrong, the legal burden rests on the taxpayer to prove that, just as in a direct tax appeal.
2. HMRC’s burden on penalty-specific elements
   HMRC bear the legal burden on:
   • All conditions that are distinctive to the penalty regime (deliberate/careless behaviour; concealment; reasonable excuse where the statute places the burden on HMRC; officer attribution; penalty categorisation and calculation); and
   • Any express statutory burdens (e.g. dishonesty elements under s 60 VATA, or the reverse burden placed on taxpayers by s 154(2) CEMA).
3. Severability under Article 6
   The Court gives strong effect to the Ferrazzini / Jussila line: tax liability remains a non-criminal matter, even within penalty proceedings. Article 6 applies only to the penalty’s criminal aspects; it does not convert tax liability disputes into criminal charges.
4. Zaman approved; Euro Wines refined
   The UT’s approach in Zaman is substantively endorsed and should now be followed. Dicta in Euro Wines suggesting a wider burden on HMRC in excise penalty liability elements are held to be mistaken obiter and should not be used to undermine the taxpayer’s burden on underlying liability.
5. Tribunal discipline in handling evidence and precedents
   The judgment emphasises:
   • The need to consider all relevant evidence holistically (e.g. control and place of supply cannot be artificially compartmentalised); and
   • The importance of using “per incuriam” carefully in UT jurisprudence, recognising that UT decisions have persuasive but not binding force inter se.
6. Practical consequences
   All outstanding appeals by Global and Mr Malde are to be reheard by a new FTT panel. Fundamentally, however, the precedent now set will shape tax penalty litigation across the system, ensuring that:
   • Tax assessments maintain their traditional presumption of correctness;
   • Penalty proceedings respect Article 6 without overreaching into tax liability; and
   • Taxpayers cannot manipulate procedural routes to shift burdens unfairly onto HMRC.

In the broader legal context, Sintra reconciles domestic tax appeal principles with the Strasbourg “criminal charge” jurisprudence in a way that is both doctrinally coherent and practically workable. It will serve as the leading authority on the interaction between underlying tax liability and civil penalties under the modern FA 2007/2008 regimes for years to come.