Phoenix Food and Drink Limited v The Commissioners for HMRC

Introduction

1. The appellant, Phoenix Food and Drink Limited (“Phoenix”) would like to sell alcohol on a wholesale basis. HMRC have however refused approval to do this as they consider that Phoenix is not a fit and proper person due to the involvement of Mr Geoffrey Monkman who is the sole owner and director of Phoenix.

2. HMRC’s concern is based primarily on the fact that Mr Monkman was involved in the management of a predecessor business, Lakeland Artisan Limited (“Lakeland”) which went into liquidation owing HMRC approximately £85,000 with the business and assets of Lakeland being purchased from the liquidator by Phoenix enabling it to carry on effectively the same business.

3. Phoenix appeals against HMRC’s decision on the basis that the decision was not reasonably arrived at. legal principles

4. The legal principles to be applied by the Tribunal are not controversial and are not in dispute. Alcohol wholesaler registration scheme – Legal principles

5. In accordance with s 100 Finance (No. 2) Act 2023 , a person may only sell alcohol on a wholesale basis if HMRC give their approval (the wholesale of alcohol being a “controlled activity” for this purpose – s 98(8) Finance (No. 2) Act 2023). HMRC may only give their approval if they are satisfied that the person is a fit and proper person to carry on the activity.

6. HMRC gives some guidance in Excise Notice 2002 as to how they apply the fit and proper person test. This notice does not have the force of law but is helpful in understanding HMRC’s interpretation of the fit and proper person test.

7. The notice explains that “HMRC must be satisfied that the business is genuine and that all persons with an important role or interest in it are law abiding, responsible, and do not pose any significant threat in terms of potential revenue non-compliance or fraud.”

8. It is therefore apparent that HMRC’s view is that the purpose of the AWRS is to protect against the risk of a loss of potential tax revenues. We agree with this.

9. The notice then lists various factors which HMRC will take into account but stresses that the list is not exhaustive and that HMRC will take other relevant factors into account. We do not need to list all of the factors but it is worth highlighting the following which are listed as factors which might lead to a refusal of approval: (1) Key persons involved in the business having been previously involved in significant revenue non-compliance, including where there have been assessments for duty unpaid stock or under declarations of tax that suggests there is a significant risk that the business will be prepared to trade in duty unpaid alcoholic product. (2) Persistent or negligent failures to comply with HMRC record keeping requirements in spite of warnings. (3) Outstanding, unmanaged HMRC debts or a history of poor payment.

10. Any appeal to the Tribunal against HMRC’s decision to refuse approval is made under s 16 Finance Act 1994 . We do not need to go into the precise legal analysis for this as it is complex and not in dispute, but it can be gleaned from s 13A(2) and schedule 5 to Finance Act 1994.

11. Section 16(4) Finance Act 1994 sets out the powers of the Tribunal appeal against this sort of decision. Where “the Tribunal are satisfied that the Commissioners or other person making the decision could not reasonably have arrived at it” it has power: “(a) to direct that the decision, insofar as it remains in force, is to cease to have effect from such time as the Tribunal may direct; (b) to require the Commissioners to conduct, in accordance with the directions of the Tribunal, a review or further review as appropriate of the original decision; ...”

12. As can be seen, the threshold requirement is that the Tribunal are satisfied that the person making the decision could not reasonably have arrived at it. The burden of proof is on the appellant ( s 16(6) Finance Act 1994 ).

13. HMRC refer to the decision of the Court of Appeal in Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223 at [229-230] for the principles to be applied in determining whether the decision has been arrived at reasonably. The principles may be summarised as follows: (1) There must be no error of law in relation to the decision to be taken. (2) The decision maker must take into account all relevant considerations. (3) They must however exclude any irrelevant considerations. (4) Even if the right factors are taken into account, a decision may be unreasonable if it is one which no reasonable person could have come to in the circumstances.

14. It is important to stress that this is therefore a supervisory jurisdiction. It is not enough that the Tribunal would have made a different decision to the one made by HMRC. Instead, it is necessary to show that one or more of the factors mentioned above is engaged in order to show that the decision has not been arrived at reasonably.

15. It is worth noting that these principles were approved in the context of tax by the House of Lords in Customs and Excise Commissioners v JH Corbitt (Numismatists) Limited [1980] 2 All ER 72 at [80] and the Court of Appeal in John Dee Limited v Commissioners of Customs and Excise [1995] STC 941 at [952]. As was noted by the Court of Appeal in John Dee at [953], even if the Tribunal identifies a flaw in HMRC’s decision making, it should not allow the appeal if it is inevitable that, but for the flaw, HMRC would have reached the same decision.

16. Ms Young accepted that, in determining whether the decision was arrived at reasonably, the Tribunal may make findings in relation to the primary facts in existence at the time of the decision (see Gora v Customs and Excise Commissioners [2003] EWCA Civ 525 at [38-39]). This might for example include a determination as to whether a taxpayer was to blame for a previous default. The evidence and the relevant facts

17. The evidence before us consisted of a bundle of correspondence and documents produced by HMRC with input from Phoenix. We also had a witness statement from Mr Monkman and from HMRC’s decision maker, Ms Matheson. Both of the witnesses gave oral evidence and were cross-examined. We are satisfied that both witnesses were doing their best to answer the questions put to them honestly and we are happy to accept their evidence at face value.

18. We note that there was an unfortunate lack of documentary evidence in relation to certain matters (for example, the precise amount of tax owed/paid by Lakeland to HMRC at particular points in time (particularly between July 2023-July 2024) and what was discussed at meetings between Lakeland and HMRC in 2024). In the absence of such evidence, we have made findings on the balance of probabilities based on the evidence available to us where we have been able to do so.

19. Mr Monkman established the business which became Lakeland with a partner in 2006. He bought out his partner in 2010 and transferred the business to a limited company in 2012. At this point, Mr Monkman was the sole owner and director of the company and ran the business on his own, including dealing with financial matters.

20. Part of Lakeland’s business involved blending spirits to make liqueurs which were sold in its shops and other outlets. Lakeland had been approved under the AWRS to enable it to carry out these activities. This also involved Lakeland purchasing alcohol on a duty suspended basis which meant that it had to account for excise duty when the alcohol was moved out of the bonded side of the warehouse.

21. In April 2019, Mr Monkman married his wife, Mary Monkman. Mrs Monkman was a qualified accountant with her own accountancy business, and she joined the company as a co-director at this time. The split of responsibilities was that Mrs Monkman dealt with all the financial matters, leaving Mr Monkman to concentrate on production and selling. At this point, the business was growing significantly.

22. Mr Monkman’s evidence, which was not challenged by HMRC and which we accept, is that from 2006 to 2019, the business never had any problems with HMRC and complied in all material respects with its tax obligations.

23. Lakeland had one shop of its own. In 2020, a further five shops were opened although these were owned by separate companies and so were not operated by Lakeland (although they did purchase stock from Lakeland).

24. At times, Mr Monkman noticed that Lakeland’s bank account balance was relatively low but was reassured by his wife that everything was fine given that there was a significant amount of money tied up in stock for the six shops (which, we infer, would enable the shops to pay Lakeland for the stock supplied). Mr Monkman accepted these reassurances at face value.

25. Very sadly, on 16 July 2023, Mrs Monkman disappeared, having driven to a loch in Scotland where her car was found. She has not been heard from since.

26. Around a month or so after Mrs Monkman disappeared, Mr Monkman engaged an external accountant to help him unravel the finances of the business and an in-house book-keeper to look after the finances going forward.

27. Two important points emerged from the accountant’s investigations. The first is that the business owed in the region of £120,000-£130,000 to HMRC. The second was that the shops were loss making whilst the production part of the business was profitable. It transpired that Mrs Monkman had been diverting funds from unconnected businesses to which she provided accountancy or book-keeping services to support the Lakeland business.

28. Mr Monkman was interviewed by the police under caution in relation to the diversion of funds but the police confirmed in February 2024 that Mr Monkman was no longer under investigation and that “there was no criminal case for you to answer in relation to the fraud”.

29. As the shops were loss making, they were closed by the end of 2023.

30. HMRC made a visit to Lakeland in February 2024 with follow-up visits in March 2024 and May 2024. We do not have notes of those visits and any follow-up communications as a result of the visits. However, it is apparent that Lakeland had failed to submit the correct returns in relation to the movement of alcohol held on a duty suspended basis.

31. Mr Monkman’s evidence is that, once this was brought to his attention, he submitted the necessary returns. This also seems to be supported by HMRC’s statement of case which records that “during a telephone call on 9 April 2024, the respondents clarified that a W5 had been submitted although prior to 15 February 2024 no duty had been paid.”

32. The statement of case goes on to “deny that Mr Monkman complied with all requests and completed all the paperwork.” However, no documentary evidence has been provided to back this up. On the contrary, Ms Matheson accepted in her oral evidence that returns had been submitted when requested.

33. Based on this, we find that the necessary returns were submitted by Lakeland once the omissions had been drawn to Mr Monkman’s attention as a result of the HMRC visits.

34. Between February 2024 – July 2024, Mr Monkman injected almost £80,000 into the Lakeland business, some of which was his own money and some of which he had borrowed from family members. The money was used to support the business, including making some tax payments to HMRC.

35. In making this finding, we note that we have no documentary evidence as to the tax payments made to HMRC between July 2023 – July 2024. However, we do have Mr Monkman’s oral evidence that the tax debt to HMRC was in the region of £120,000 – £130,000 in July 2023. We know that the amount due to HMRC when Lakeland went into liquidation in July 2024 was approximately £85,000. This suggests that between £35,000 – £45,000 of the tax debts had been paid off during this period.

36. It must also be inferred that tax liabilities arising between July 2023 – July 2024 were paid as the tax debt would otherwise have increased rather than decreased during this period. We therefore have no reason to doubt Mr Monkman’s evidence that some of the money introduced into the business in 2024 was used to pay debts due to HMRC.

37. Despite attempts to keep the business going, Mr Monkman’s accountant advised him that the business was unsustainable given the outstanding debts. We have no evidence as to the debts owed by Phoenix in July 2024, and in particular, whether it owed money to anybody other than HMRC and so cannot make any findings in relation to this. All we know is that, at the time the business was liquidated, approximately £85,000 was owed to HMRC.

38. As a result of the accountant’s advice, Mr Monkman had discussions both with his accountant and a liquidator. Their advice was that Lakeland should be put into voluntary liquidation as the business was otherwise likely to be put into compulsory liquidation.

39. The liquidator agreed, however, that Mr Monkman could set up a new company (Phoenix) which would purchase the business and assets of Lakeland with the purchase price to be paid in instalments and ultimately to be paid following the sale of the home owned by Mr and Mrs Monkman, which could only be sold after Mr Monkman obtained a guardianship order in relation to his wife’s assets (which was issued on 16 December 2024).

40. The business and assets of Lakeland were sold to Phoenix (based on a price agreed with the liquidator) on 4 July 2024. Lakeland entered voluntary liquidation on 19 July 2024.

41. One difference between Lakeland’s business and the business carried on by Phoenix is that Phoenix does not trade in duty suspended alcohol. All of the alcohol purchased by Phoenix has already had duty paid on it.

42. On 22 July 2024, Phoenix made its AWRS application to HMRC. The application was initially refused in September 2024 but this was set aside on review on the basis that the HMRC officer had not considered all of the relevant factors and had not explained in sufficient detail the reasons for the refusal.

43. As a result of this, the matter was referred to Ms Matheson in November 2024. Having received some further information from Phoenix, Ms Matheson refused the application on 11 December 2024. The reasons given in the letter for the refusal were as follows: (1) Mr Monkman was a director of Lakeland, which went into liquidation owing HMRC approximately £85,000. (2) Lakeland transferred its business and assets to Phoenix, allowing Mr Monkman to continue to trade free of the HMRC debts. (3) Despite support and education to Mr Monkman, there were still issues with “non-compliance”. (4) Phoenix owed HMRC £613.71 of VAT and £1,707.17 in relation to PAYE, suggesting an “ongoing significant risk to the Revenue”. HMRC, however, now accept that Phoenix did not owe any tax to HMRC at the date of the decision as the VAT figure was a repayment due to Phoenix and the PAYE was not due until 22 January 2025.

44. Phoenix requested a review of Ms Matheson’s decision but the review upheld that decision, hence Phoenix’s appeal to the Tribunal. Was the decision to refuse approval arrived at reasonably?

45. On behalf of HMRC, Ms Young submits that Ms Matheson took into account all of the relevant factors and that the decision to refuse the application was proper and reasonable in the circumstances. She accepts that Phoenix did not in fact owe any tax to HMRC at the time the decision was made but submits that this was a minor factor and that the decision would have been the same in any event given the significant outstanding debt to HMRC from Lakeland at the time it was put into liquidation.

46. As far as the transfer of the business from Lakeland to Phoenix is concerned, Ms Young points out that Mr Monkman could have continued to trade through Lakeland and enter into a time to pay agreement with HMRC in relation to the outstanding debts, as advised by the HMRC officers who visited Lakeland in 2024. Given Mr Monkman’s decision not to do this and, instead, to put Lakeland in liquidation, leaving the HMRC debts unpaid, she submits it was not unreasonable for Ms Matheson to conclude that the application should be refused.

47. Turning to the failure to keep adequate records, Ms Young argues that it is clear from the HMRC visits in February and March 2024 that there were outstanding returns and that this was therefore an appropriate factor for Ms Matheson to take into account.

48. Whilst not challenging Mr Monkman’s evidence that he was unaware of Phoenix’s financial difficulties before his wife’s disappearance, Ms Young submits that it was appropriate for Ms Matheson to take the view that, as a director, Mr Monkman should have been more inquisitive in relation to the financial affairs of the business and should not have simply relied on his wife.

49. The underlying suggestion was that, had Mr Monkman taken a more active interest in the financial side of the business, it may have been possible to avoid the unpaid liabilities to HMRC.

50. Ms Young even went so far as to suggest that the employment of an external accountant and an in-house book-keeper by Phoenix demonstrated a similar pattern whereby Mr Monkman was effectively abdicating responsibility for the finances with the consequent risk that a similar situation could arise in the future. We have to say that we found it extraordinary that HMRC would criticise a taxpayer for seeking professional help in complying with their tax obligations rather than doing it themselves.

51. Ms Young also notes that Mr Monkman was in sole charge of the business between July 2023 and July 2024 and so it was not unreasonable for Ms Matheson to take the view that he was responsible for the unpaid HMRC debts as a result of Lakeland going into liquidation.

52. As might be expected, given that Mr Monkman was representing Phoenix without professional help, his submissions were not focused precisely on the question as to whether there were relevant factors which Ms Matheson failed to take into account or irrelevant factors which she took into account when reaching her decision. However, the submissions he made identified the following points: (1) The Lakeland business had traded without any tax issues prior to his wife joining the business. The tax problems only arose after his wife had taken over responsibility for the finances. Mr Monkman feels that he is being victimised for problems caused by his wife. (2) He tried to keep the business going and pay off the HMRC debt, including introducing £80,000 of his own money (all of which was lost). Although the business ultimately went into liquidation, owing HMRC a significant amount of money, the HMRC debt would have been higher had he put the business into liquidation immediately after his wife’s disappearance. (3) The purchase of the business and assets of Lakeland by Phoenix was agreed with the liquidator. Although he had some concerns that this was not “the done thing” he was reassured by his accountant and the liquidator that it was common practice. (4) Phoenix has introduced measures to ensure tax problems do not arise including employing an external accountant and an internal book-keeper and setting up direct debits to pay VAT and PAYE. Since it started trading, it has complied with all of its tax obligations. A visit from HMRC in January 2025 (after the date of the decision) confirmed that they were happy with the way the business was being run from the point of view of tax compliance. (5) Phoenix is not trading in duty suspended goods and so excise duty is no longer an issue.

53. In our view, the decision to refuse approval was not arrived at reasonably as there are a number of relevant factors which were not taken into account as well as irrelevant factors which were taken into account.

54. The first relevant factor which was not taken into account is Mr Monkman’s lack of responsibility for, and knowledge of, the tax debts due to HMRC at the date Mrs Monkman disappeared in July 2023.

55. Having considered the evidence, it is clear to us that Mr Monkman was not responsible for the building up of the tax debts to HMRC which, by the time of Mrs Monkman’s disappearance, totalled approximately £120,000-£130,000 and that he did not know about them. He left the financial side of the business to his wife who was a qualified accountant. This was his unchallenged evidence.

56. HMRC do not in fact suggest that Mr Monkman was aware of the tax debts prior to his wife’s disappearance. Their complaint is that he should have taken a more active interest in the financial side of the business and asked more questions, as a result of which he would have found out about the problems.

57. We cannot make any finding as to whether he would have become aware of the problems had he asked more questions as we do not have the evidence to do so. We do note, however, that there is clear evidence that his wife was concealing the company’s financial difficulties by diverting funds from other businesses and so it is perfectly possible that he would still not have been aware of the full picture.

58. However, the key point is that, in circumstances where the question is whether Phoenix, which is managed by Mr Monkman alone, is a fit and proper person to be given approval, the fact that he was not aware of the tax debts being built up by Lakeland because the finances were managed by his wife (who was also a director) is, in our view, a highly relevant factor.

59. Whilst Mr Monkman can be criticised indirectly for not being more inquisitive, the real cause of the tax debts was the actions of Mrs Monkman in her management of the finances. This might well indicate that, in the circumstances where Mr Monkman is the sole director of Phoenix and is therefore responsible for all areas of the business, including finance, the same risk of loss of revenue does not arise.

60. In her witness statement, Ms Matheson confirms that Mrs Monkman’s responsibility “for the company’s record keeping and creditor payments…did not influence the decision in this case”. It is therefore clear that Mr Monkman’s lack of knowledge of, or responsibility for, the tax debts of Lakeland was not a factor which Ms Matheson took into account in reaching her decision. We consider that she should have done so and that it is a very important factor for the reasons we have explained.

61. Linked to this is the fact that (as we have found as a fact based on Mr Monkman’s evidence) there were no compliance issues in relation to HMRC for the business of Lakeland and its predecessors in the period from 2006-2019. At least since 2010 (when Mr Monkman bought out his partner), he was responsible for all aspects of the business, including finances.

62. Ms Matheson confirmed in her evidence that she had not investigated the prior compliance history of Lakeland and had focused only on the fact that it had gone into liquidation, owing HMRC around £85,000. Subject to any record keeping constraints, the tax compliance history of the business must have been available to HMRC (and is something which Ms Matheson could have investigated).

63. Given that the question to be answered by Ms Matheson was whether Phoenix, which was managed by Mr Monkman alone, was a fit and proper person to be granted approval, the compliance history of Lakeland at the time when it was managed by Mr Monkman alone must, in our view, be a relevant consideration. This should have been taken into account.

64. In relation to the tax debts due to HMRC on the liquidation of Lakeland, Ms Matheson confirmed that she did not look at the evolution of these debts between July 2023 and July 2024. Instead, she looked only at a snapshot of the position at the date Lakeland went into liquidation.

65. In the light of Mr Monkman’s attempts to explain to HMRC the origins of the problems faced by Lakeland due to the actions of his wife and her disappearance in July 2023, we consider that this is a further relevant factor which should have been taken into account. Ms Matheson does not suggest that she would not have been able to obtain this information had she wished to do so. She simply confirmed that it was not part of her investigation.

66. Based on our factual findings, had she investigated this point, she would have discovered that, in the period between July 2023 and July 2024, Lakeland had in fact reduced its tax debt by somewhere between £35,000-£45,000 even after taking account of tax liabilities which would have arisen during that period.

67. As Mr Monkman points out, had Lakeland been put into liquidation in July 2023, rather than trying to continue trading (resulting in a significant loss to Mr Monkman personally due to the £80,000 he invested in the first half of 2024) the loss to HMRC would have been much greater.

68. Again, in assessing the risk to the collection of revenue in relation to a business operated by Mr Monkman alone, the fact that the tax debt reduced during this period is, in our judgment, a relevant factor which should have been taken into account.

69. Whilst we accept that poor record keeping and non-compliance is a relevant factor, particularly where it leads to a loss of tax, the specific point relied on by Ms Matheson in her letter refusing approval is that “there were still issues with non-compliance” after the HMRC visits during which support and education were provided to Mr Monkman.

70. In relation to the non-compliance, it is not clear whether Ms Matheson was referring to the outstanding tax which was due or the failure to file returns in relation to the movement of alcohol out of the bonded side of the warehouse. In her witness statement, Ms Matheson refers both to poor record keeping and to unmanaged debt. HMRC’s statement of case also refers to missing returns which had been identified as well as the outstanding debts.

71. To the extent that this item in the letter refers to the outstanding tax, we agree that it is a relevant factor. The business was advised to enter into a time to pay arrangement but did not do so. Mr Monkman has not offered any explanation for this, although did at one point note that his accountant had advised him that the debt was “insurmountable”.

72. However, to the extent that the comment in the refusal letter refers to the failure to file returns, we have found as a fact that, once this had been drawn to Mr Monkman’s attention and HMRC had explained what needed to be done, Mr Monkman complied. The failure to comply in the first place is a negative factor but the fact that Mr Monkman complied when he understood what needed to be done is a positive factor.

73. As we have said, Phoenix does not intend to trade in duty suspended goods. Ms Matheson confirmed in her evidence that, at the time of making her decision, she was aware of this. There is however no suggestion that it is a factor which Ms Matheson took into account in reaching her decision.

74. In our view, it is a relevant factor given that a significant part of the tax debt (almost £37,000) due when Lakeland entered into liquidation related to excise duty and the failure to file returns also relates to the duty suspended goods. The decision to no longer trade in duty suspended goods is a clear indication that Phoenix is trying to run its business in a way which minimises the risk of falling into the same difficulties as Lakeland. In assessing the risk of any loss of revenue, this is therefore a relevant factor which should be taken into account.

75. As we have already said, it is conceded by HMRC that Phoenix did not owe HMRC any tax at the date the decision was made in December 2024. This was therefore an irrelevant factor which was taken into account in reaching the decision to refuse approval.

76. On the contrary, Mr Monkman’s evidence is that Phoenix had complied with all of its tax obligations up to the date of the decision and continues to do so. This evidence was not challenged by HMRC and so we accept Mr Monkman’s evidence in relation to this. It is clearly a relevant factor and should have been taken into account.

77. Although it is not a point raised by either party prior to the hearing, it emerged during Ms Matheson’s evidence that she considered that the liquidation of Lakeland leaving debts due to HMRC, in conjunction with the purchase of Lakeland’s business and assets by Phoenix, enabling Phoenix to carry on effectively the same business but without being liable for the HMRC debts, showed dishonesty on the part of Mr Monkman. Based on the evidence before us, we are satisfied that Mr Monkman did not act dishonestly.

78. Given that neither party had raised the issue of dishonesty, no submissions were made about it at the hearing. However, the approach to determining dishonesty is well known and is not controversial. It was explained by the Supreme Court in Ivey v Genting Casinos UK Limited [2017] UKSC 67 at [74]. The Tribunal must determine (subjectively) what the individual actually knew. They must then consider (objectively) whether that person’s conduct was dishonest by applying the standards of ordinary decent people.

79. In this case, Mr Monkman took advice from his accountant and from the proposed liquidator. He was concerned that what was being proposed was not the done thing but was reassured that it was common practice.

80. In the light of this, we do not consider that there can be any argument that what he did would be seen by ordinary decent people as dishonest. He was simply following the advice he had been given by his advisors.

81. It is also relevant to consider the events leading up to liquidation. Mr Monkman found himself in difficulties which were not of his own making. He tried to keep the business afloat and personally invested £80,000, all of which was lost. As Mr Monkman points out, this is hardly the actions of someone who is acting dishonestly.

82. As we have noted, no suggestion was made by HMRC prior to the hearing that Mr Monkman was dishonest and it was (quite rightly) not a point that was put to him in cross-examination. Dishonesty cannot therefore be relied on by HMRC, irrespective of our conclusion that Mr Monkman was not dishonest. This cannot therefore be a relevant factor and should not have been taken into account by Ms Matheson.

83. For all of these reasons, the decision to refuse approval was not one which was arrived at reasonably. decision and directions

84. The Tribunal retains the discretion as to whether or not to direct that the decision to refuse approval should cease to have effect. As we have said, the decision should not be overturned if it is inevitable that HMRC would reach the same decision if all the relevant factors are taken into account and the irrelevant factors ignored.

85. However, we cannot say that this would be the case given the importance of taking into account not only the fact that Lakeland went into liquidation owing HMRC a significant amount of money but also of considering how that debt arose, the extent of Mr Monkman’s responsibility for it and his previous history of compliance before Mrs Monkman became involved.

86. We therefore direct that the decision to refuse approval should cease to have effect from the date of this decision.

87. We further direct that HMRC must carry out a further review of the original decision. That review should take account of the findings in this decision including the following: (1) the debts due to HMRC accumulated as a result of the actions of Mrs Monkman and were unknown to Mr Monkman prior to his wife’s disappearance in July 2023; (2) the debts due to HMRC reduced during the period between July 2023 and July 2024 when Lakeland was put into liquidation; (3) Mr Monkman did not act dishonestly in putting Lakeland into liquidation, setting up Phoenix and agreeing with the liquidator of Lakeland that Phoenix should purchase the business and assets of Lakeland at a price agreed with the liquidator; (4) the Lakeland business complied with its tax obligations when it was being run by Mr Monkman alone between 2006-2019; (5) Phoenix was not in default in respect of its tax obligations in December 2024; (6) Phoenix is not trading in duty suspended products.

88. The review should take into account any further relevant factors relating to the period from December 2024 to the date of the review, including the continued compliance by Phoenix with its tax obligations;

89. For the avoidance of doubt, the fact that Lakeland was placed into liquidation owing significant amounts of money to HMRC remains a relevant factor, but that must be weighed in the balance against the other factors in determining whether granting approval will give rise to a significant risk of lost revenue due to non-compliance.

90. There was some discussion at the hearing as to the timescale within which HMRC should undertake this further review. Ms Young pointed out that HMRC may wish to consider whether to appeal and that they have 56 days from this decision notice to apply for permission to appeal. On the other hand, there is potential unfairness to Phoenix if it has to wait too long for a decision as, in the meantime, it is unable to sell its alcoholic products on a wholesale basis.

91. In the light of this, it was agreed that we should direct that the review should be carried out within 56 days of the date of this decision. This is longer than the normal 45 days allowed for a review but still leaves adequate time for HMRC to consider whether to appeal and, if not, to conduct the review. Right to apply for permission to appeal

92. 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. Release date: 13 th FEBRUARY 2026