Upper Tribunal dismisses Appeal in landmark labour market tax fraud case

The Upper Tribunal (Rajah J and Judge Thomas Scott) handed down judgment on 17 July 2025 in this significant litigation concerning labour market tax fraud. James Puzey of Six Pump Court, leading Joe Millington of St Philips Chambers appeared for HMRC. The Appellants were the designated lead cases from a total of over 18,000 Appellants who were appealing decisions by HMRC to deregister them for VAT, assess them to VAT and disallow employment allowance claims. HMRC took the decisions on the basis that the Appellants were part of a massive labour supplier tax fraud involving several hundred million pounds-worth of evaded tax. They had pretended to be separate, independently-run companies, each with their own director in charge in the Philippines. This was in order to take advantage of reliefs available to small UK companies. In fact they were set up and controlled centrally by fraudsters. In 2024 the First Tier Tribunal Tax Tribunal found that there was such a fraud and that the Companies had rightly been assessed to tax. The Upper Tribunal has just dismissed their appeals and upheld HMRC’s decision to deregister them.