HMRC loses tax case after freezing man’s assets for seven years
HM Revenue & Customs has lost a £25m lawsuit after accusing a man of smuggling alcohol into Britain and freezing his assets for seven years.
Parul Malde, who was accused by HMRC of evading VAT and excise duty on imported alcohol, won his landmark tax fraud case, the biggest of its kind.
HMRC blocked the businessman from his own funds for seven years after allegations he sold alcohol in the UK between 2004 and 2014 through two overseas companies without paying VAT and duty.
But the tax tribunal ruled in favor of Mr Malde, citing a lack of evidence that at least one of the businesses was liable to pay VAT.
The court criticized HMRC officials for failing to “consider or even assess the material” before them.
HMRC froze Mr Malde’s assets for seven years in one of the longest-running freezing orders in history.
Simon Ellis, of law firm Freeths, which represented Mr Malde, said the court order had “severely affected” the businessman, causing him “significant harm” both personally and professionally.
“The freezing order from HMRC prevented him from returning to his home for five years due to an inability to spend more money on ongoing renovations,” Mr Ellis said. “Not only that, he was unable to expand or grow any of his other businesses, one of which was a dental practice.”
Sam Healy, of law firm JMW Solicitors, said account freezing orders were relatively easy to obtain and had been issued more frequently by HMRC in recent years.
While the court must have reasonable grounds to suspect that the funds in the account have been or will be misused, Mr Healy said there was a “very low threshold that must be met when making an order to freeze an account “.
Tax firm BDO’s Dawn Register said the case highlighted “HMRC’s full power in issuing assessments, penalties and asset freezes, which in the right circumstances can be justified”.
She added: “However, if misjudged, the consequences can be catastrophic for the individual.”
An HMRC spokesman said: “We are carefully considering the Tribunal’s decision and our next steps.”