In the case of Purple Pay Ltd & Anor v HMRC [2026] UKFTT 625 (TC), the FTT has struck out certain grounds of appeal against a stop notice penalty imposed on the company and a joint and several liability notice (JSLN) imposed on the company’s director, both arising under the POTAS regime.
PROCEDURE – partial strike-out application – whether jurisdiction – whether reasonable prospect of success – no – whether abuse of process – no – application granted
The FTT prefaced its discussion of the disputed grounds for appeal with the comments that “The jurisdiction of this Tribunal is entirely statutory. Therefore, the source of any jurisdiction to decide an appeal must be found in legislation. If there is no such source, then there is no jurisdiction” and that “Unfortunately, some of the arguments advanced for the appellants do not appear to be anchored in the relevant legislation”. In particular, “in order to challenge the validity of the stop notice itself, the Company would have had to have made a withdrawal request within 30 days as specified in section 236D FA 14. If HMRC had received such a request and refused to withdraw the stop notice, then an appeal would have been feasible in terms of section 236E FA 14 but none of that happened.”
The first ground of appeal was that the company could not have been in breach of the stop notice primarily because it was not in business as a promoter, or at all, from around January 2022 as when the stop notice was issued the arrangements and the company’s activities had been wound up. No one was responsible for the arrangements. Therefore, the company could not have been subject to the penalty. However, the FTT noted here that “in terms of section 236A FA 14, the authorised officer only had to suspect that the Company had promoted the Arrangements. The evidence is clear to the effect that that was the case; hence the allocation of the SRN whilst the Company was still trading. I have been cited no statutory requirement to the effect that the Company had to be trading when the stop notice was issued and I am aware of none.”
The second ground was that the second appellant was not a director at any time that the company was actively involved in activities or business that would make it a promoter. The FTT noted here that “Even a cursory glance at sections 236D and 236A FA 20, which fall to be read together, show that the stop notice legislation looks to the historic position as well as the current position. For example, section 236D provides that a withdrawal request can only be made where the person, subject to a stop notice, ‘does not intend to promote and has not promoted…’. Section 236A to which section 236D refers also uses phrases liked ‘Such arrangements, have been or are likely to be, marketed’ and ‘HMRC has required any person to provide information …’.”
Noting that the the first two grounds were linked, the FTT commented that:
“these two Grounds of Appeal have been advanced because it is argued that the Penalty can only be imposed for non-compliance with the stop notice if the Company had done anything in connection with the Arrangements that would have caused it to have been acting as a promoter.
That is quite simply incorrect. As HMRC has always made explicit … the Penalty was issued because the Company had failed to comply with the statutory requirement to file the quarterly return(s). …
… The Penalty has been imposed because of a breach of section 236C FA 14. It is not disputed that no quarterly returns were ever filed. Paragraph 2(1A) of Schedule 35 FA 14 provides for a penalty to be imposed where there is a failure to comply with the provisions of section 236C FA 14.”
The third ground was that the conditions for issuing a JSLN were not met inter alia because it was argued that the penalty had not been validly issued as there could not have been a breach of the stop notice. The FTT noted here that:
“The simple facts are that
(a) the stop notice continued in force and effect as it had not been withdrawn,
(b) there was a breach of the stop notice, and
(c) the legislation makes provision for the imposition of a penalty in that event.”
Judging that the arguments were bad in law and thus had no reasonable prospect of success, the FTT concluded that:
“As far as abuse of process is concerned, I observe that paragraph 7 of the appellants’ draft Skeleton Argument argued that there could not be an abuse of process because there was a realistic prospect of success. Given my finding that there is no realistic prospect of success, the corollary of that is that there is an abuse of process.
These three Grounds of Appeal fall to be struck out … as I find that there is no reasonable prospect of that part of the appellants’ case succeeding.
To the extent, that it is argued that these Grounds of Appeal are a challenge to the validity of the issue by HMRC of the stop notice itself, and it is not entirely clear whether that is being argued, they fall to be struck out in terms of Rule 8(2)(a) of the Rules as the Tribunal has no jurisdiction in that regard.”
https://caselaw.nationalarchives.gov.uk/ukftt/tc/2026/625
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