Judgment summary
This appeal concerned 17 personal liability notices (PLNs) issued by HMRC to Mr Lindsay Hackett on 17 March 2015 under paragraph 19 of Schedule 24 to the Finance Act 2007, relating to VAT periods 07/09 to 07/13 and totalling £12,833,984.49 (1). The PLNs followed penalties assessed against Intekx Ltd, of which Mr Hackett was sole director, on the basis that deliberate inaccuracies in Intekx's VAT returns were wholly attributable to him (2).
HMRC's case was that, for periods 07/09 to 10/12, Intekx knowingly participated in transaction chains connected with fraudulent VAT evasion and claimed input tax to which it was not entitled, and that for periods 01/13 to 07/13, Intekx failed to provide sufficient business records to substantiate its input tax claims (3).
The hearing proceeded with significant procedural difficulties. Mr Hackett's postponement applications on medical grounds were refused, he participated remotely for part of 17 August 2026, then became unresponsive and subsequently declined to continue participating. The Tribunal proceeded under Rule 33 in his absence from 18 August 2026 onward (5-34).
The Tribunal found that Mr Hackett knew the transactions were connected with fraudulent VAT evasion, that the inaccuracies in the VAT returns for 07/09 to 10/12 were deliberate, that inaccuracies for periods 10/11, 01/12, 04/12, 07/12 and 10/12 were deliberate and concealed, and that inaccuracies for periods 01/13 to 07/13 arising from insufficient records were also deliberate. All such inaccuracies were found attributable to Mr Hackett as sole director. The appeal was dismissed and the PLNs upheld in full (378-381).
Background
Mr Hackett was, at all material times, the sole director of Intekx Ltd and the individual responsible for the conduct of its affairs (36). He had substantial prior business experience, including founding Status Computer Products and Services Limited in 1987, later The Status Group plc, sold in 2003, and subsequently incorporating Three Acre Farm Limited in January 2004, which later became Intekx (37-39).
Intekx and Mr Hackett had previously been involved in litigation with HMRC concerning mobile telephone trading in 2006, culminating in Intekx Ltd v HMRC [2014] UKFTT 277 (TC) ("Intekx 2014"), in which the Tribunal found that Intekx knew its transactions with Optronix were connected with fraudulent VAT evasion, that Mr Hackett was fully aware of Notice 726, and that he was an unreliable witness (42-45). Judge Berner held in Hackett v HMRC [2016] UKFTT 791 (TC) that it would be an abuse of process for Mr Hackett to relitigate matters determined in Intekx 2014, a conclusion upheld by the Upper Tribunal in Hackett v HMRC [2020] UKUT 212 (TCC) (46).
The present appeal concerned 99 transactions undertaken by Intekx between June 2009 and September 2012, involving approximately 760,300 units of electronic goods including USB storage devices, memory cards, solid state drives and Apple products, traded through a succession of transaction chains with changing counterparties, freight forwarders and customers (48-50).
Following assessments and withdrawn VAT appeals, HMRC assessed penalties against Intekx under Schedule 24 to the Finance Act 2007 totalling £12,833,984.49, and issued 17 PLNs to Mr Hackett on 17 March 2015 in the same aggregate amount, upheld on review on 25 June 2015 (54-65).
Core dispute
The issues for determination were whether HMRC had established that the inaccuracies giving rise to the Schedule 24 penalties were deliberate, and in relation to VAT periods 10/11 to 10/12, deliberate and concealed; whether those inaccuracies were attributable to Mr Hackett as an officer of Intekx under paragraph 19 of Schedule 24; and whether HMRC validly exercised its powers under paragraph 19 and whether the amounts specified in the PLNs were correct (96-98).
HMRC contended that Mr Hackett knew the transactions were connected with fraudulent VAT claims, making the inaccuracies deliberate, and in some periods deliberate and concealed, and attributable to him as sole director (236). Mr Hackett contended that Intekx carried on genuine wholesale trading, undertook appropriate due diligence, and neither knew nor could reasonably have known of any connection to fraud, disputing HMRC's conclusions on concealment and attribution (237-238).
Court findings
The Tribunal found that, from 2004 and particularly by 2006 (as established in Intekx 2014), Mr Hackett was fully aware of Notice 726 and HMRC's concerns about MTIC fraud in electronic goods (119-127). HMRC repeatedly warned Intekx, requested information, issued tax-loss notifications tracing specific transactions to fraudulent VAT losses, and notified Intekx of the deregistration of counterparties, which were then replaced by successor entities in a recurring pattern (138-170).
The Tribunal rejected Mr Hackett's reliance on an alleged "trading group" as a structured organisation, finding no evidence of its membership, governance or operation (176-185). It also found that Intekx's due diligence was extremely limited, relying mainly on Europa VAT checks, that Intekx never used HMRC's Redhill or Wigan verification services, declined to retain serial number records, and operated without formal written trading agreements (192-202).
The Tribunal found Mr Hackett's explanations regarding Dore to Door, the Alternative Banking Platforms, and the preference for Europa over Wigan did not materially assist his case on knowledge (278-300). Considering the evidence cumulatively, the Tribunal concluded that HMRC had established, on the balance of probabilities, that Mr Hackett knew the transactions for periods 07/09 to 10/12 were connected with fraudulent VAT evasion (301-305), making the resulting inaccuracies deliberate (306-314) and attributable to him as sole director (316-324).
In relation to periods 10/11, 01/12, 04/12, 07/12 and 10/12, the Tribunal found that changes to freight-forwarding arrangements from VAT period 07/11, which removed a source of documentation HMRC had previously used to trace transaction chains, were adopted with Mr Hackett's knowledge to make HMRC's tracing more difficult, rendering those inaccuracies deliberate and concealed (325-349).
For periods 01/13 to 07/13, the Tribunal found that Intekx failed to provide records sufficient to substantiate its input tax claims, that this was a deliberate inaccuracy attributable to Mr Hackett, and rejected his explanations regarding the decision not to retain serial number information as insufficient to displace that finding (350-367).
The Tribunal also addressed preliminary procedural matters, refusing Mr Hackett's adjournment applications, finding he had chosen not to participate remotely rather than being unable to do so, and proceeding under Rule 33 in his absence, while still considering all his written evidence and submissions (5-35, 262-268).
Outcome
The Tribunal concluded that HMRC had established all statutory conditions required by paragraph 19 of Schedule 24 to the Finance Act 2007 for the issue of the PLNs, and that the amounts specified in the PLNs correctly reflected the penalties assessed against Intekx Ltd (378-379). The PLNs issued to Mr Hackett on 17 March 2015, in the aggregate sum of £12,833,984.49, were held to have been validly issued, and the appeal was dismissed (380-381).
Major issues / areas of contention
- Whether Mr Hackett, as sole director of Intekx, knew that the company's transactions were connected with fraudulent VAT evasion.
- Whether the inaccuracies in Intekx's VAT returns for periods 07/09 to 10/12 were deliberate within the meaning of Schedule 24 to the Finance Act 2007.
- Whether inaccuracies for VAT periods 10/11, 01/12, 04/12, 07/12 and 10/12 were deliberate and concealed, particularly in connection with changes to freight-forwarding arrangements.
- Whether Intekx's failure to provide sufficient business records for periods 01/13 to 07/13 gave rise to deliberate inaccuracies.
- Whether any deliberate inaccuracies were properly attributable to Mr Hackett as an officer of Intekx under paragraph 19 of Schedule 24.
- Whether the amounts specified in the personal liability notices were correctly calculated.
- Preliminary procedural issues concerning Mr Hackett's adjournment applications, remote participation and the Tribunal's decision to proceed under Rule 33 in his absence.
- The weight to be attached to Mr Hackett's untested witness evidence following his withdrawal from participation in the hearing.
- The extent to which findings made in the earlier case of Intekx 2014 formed part of the factual background to the present appeal without determining its outcome.