Burden of proof decides more tax appeals than any other factor. Sintra Global answers what happens when the assessment rule and the penalty rule collide: a taxpayer who defends a penalty by saying the underlying tax was never due must prove it. The Supreme Court has given permission to appeal, so the position may yet change.
On this page
Full name: Commissioners for His Majesty’s Revenue and Customs v Sintra Global Inc and Malde
Citation: [2025] EWCA Civ 1661 (on appeal from [2024] UKUT 346 (TCC))
Court: Court of Appeal
Judgment: December 2025
Subject: Where the burden of proof lies when a taxpayer defends a penalty by disputing the underlying tax liability
Result: HMRC’s appeal allowed; the Upper Tribunal was reversed and the case remitted to the First-tier Tribunal. Permission to appeal to the Supreme Court granted.
Why This Case Matters
Burden of proof decides more tax appeals than any other single factor, and the rules are not intuitive.
On an appeal against an assessment, the burden is generally on the taxpayer to show that the figure is wrong. On an appeal against a penalty, the burden is on HMRC to establish that the penalty is due, including the behaviour on which it rests. The question Sintra Global answers is what happens where those two rules collide: where a penalty is calculated by reference to an underlying tax liability, and the taxpayer’s answer to the penalty is that the underlying liability was never due in the first place.
The Facts
Sintra Global Inc is a Panamanian company which carried on substantial cross-border trade in alcohol between the United Kingdom and the European Union. It was controlled by Mr Parul Malde.
HMRC’s case was that Sintra Global systematically evaded VAT and UK excise duty on alcohol by mislabelling consignments as destined for consumption in mainland European countries with lower alcohol duties, and then smuggling the goods into the United Kingdom. HMRC raised assessments and penalties, and pursued Mr Malde personally.
The sums involved were very large, and the evidential picture was, as in most excise diversion cases, constructed from documentary and third-party material rather than from the appellant’s own records.
The Issue
Where a taxpayer appeals against a penalty and, by way of defence, contends that the underlying tax or duty liability on which the penalty is calculated was never due, who bears the burden of proof on that underlying question?
Two positions were available:
- The taxpayer’s position: that because HMRC bears the burden on a penalty appeal, and the underlying liability is a component of the penalty, HMRC must prove the underlying liability as part of proving the penalty.
- HMRC’s position: that the burden on the underlying liability should be the same whether it is raised on an appeal against the assessment or as a defence to a penalty, and should therefore rest on the taxpayer.
The Ratio Decidendi
The reasoning
The Court’s rationale rests on the premise that underlies the allocation of the burden in assessment appeals generally: the taxpayer should normally have access to all the information needed to resolve their own tax affairs. It is the taxpayer who knows what was traded, where it went, what was paid and what records exist. HMRC, particularly in a diversion or suppression case, is reconstructing from the outside.
If the burden shifted merely because the dispute was framed as a defence to a penalty rather than as an appeal against the assessment, the same factual question would be decided on different footings depending on the procedural label attached to it. The Court declined to accept that.
What the decision does not do
This is where careful reading matters, because HMRC will read the case more widely than it goes.
- It does not reverse the burden on the penalty itself. HMRC still has to establish that the conditions for the penalty are met, including, where relevant, the behaviour category. The subjective deliberateness standard in HMRC v Tooth and Auxilium is unaffected.
- It does not affect reasonable excuse. The Perrin framework, under which the taxpayer establishes the excuse on the balance of probabilities once HMRC has shown the penalty was properly imposed, is untouched.
- It does not alter the position where HMRC alleges dishonesty or fraud. Where HMRC makes a positive allegation of that kind as an element of the penalty, it must prove it.
- It does not lower the standard of proof. The civil standard applies throughout.
Obiter and Open Questions
- The scope of “underpinned by”. The judgment does not exhaustively define which penalties are underpinned by an underlying liability for these purposes. Inaccuracy penalties under Schedule 24 FA 2007 and wrongdoing penalties calculated by reference to duty plainly are. The position is less clear for penalties calculated by reference to something other than tax due, and for penalties where the underlying liability was determined in separate proceedings.
- The interaction with personal liability notices. Where a penalty is transferred to an officer under paragraph 19 of Schedule 24 FA 2007, the officer may wish to dispute the company’s underlying liability. How the burden operates in that triangulated situation was not decided.
- Practical consequences for evidence. The Court’s observations about the taxpayer’s superior access to information are the policy foundation of the decision rather than a rule, but they will be quoted at appellants who cannot produce records.
- The Supreme Court appeal. Permission has been granted. The Supreme Court may confirm, narrow or reverse. Any advice given now should record that the position may change.
Where This Sits in the Burden of Proof Map
| Issue | Burden | Authority |
|---|---|---|
| Amount of an assessment is wrong | Taxpayer | Long-settled; Pegasus Birds |
| Validity of a discovery assessment | HMRC | s29 TMA 1970; Tooth |
| Careless or deliberate behaviour | HMRC | Tooth; Auxilium |
| Penalty properly imposed | HMRC | Schedule 24 FA 2007; Perrin |
| Reasonable excuse | Taxpayer | Perrin |
| Underlying liability disputed as a defence to a penalty | Taxpayer | Sintra Global (under appeal) |
| Knew or should have known of connection with VAT fraud | HMRC | Kittel; Mobilx |
Practitioner Application
- Plan the evidence on the assumption you carry the burden. In any penalty appeal where the client’s answer is “the tax was never due”, build a positive case with documents. An appeal that consists of putting HMRC to proof on the underlying liability is now unlikely to succeed.
- Separate the issues explicitly in the grounds. Set out which matters HMRC must prove (the conditions for the penalty, the behaviour category, any allegation of dishonesty), and which the appellant accepts it must prove. A tribunal that is clear on the allocation is less likely to apply the wrong one.
- Hold the line on behaviour. Sintra Global is about the underlying liability. It does not transfer to the appellant the burden of disproving deliberateness. Expect HMRC to try.
- Reconstruct records early. The rationale of the decision is the taxpayer’s superior access to information. Where records are genuinely lost or were never held by the appellant, common where a company has been dissolved or an officer is being pursued personally, put evidence of that before the tribunal rather than leaving the gap unexplained.
- Consider a stay. Where a live appeal turns squarely on this point, consider applying to the FTT to stay the proceedings behind the Supreme Court appeal, or at minimum to preserve the argument on the record.
- Do not overlook validity and time limits. A penalty that was not validly assessed or notified fails regardless of who bears the burden on quantum.
Frequently Asked Questions
What did Sintra Global decide?
That where a penalty is underpinned by an underlying tax liability, a taxpayer who defends the penalty by arguing that the underlying liability is incorrect must prove that. The Court of Appeal reversed the Upper Tribunal and aligned the burden with that applying on an appeal against the assessment itself, on the basis that the taxpayer should normally have access to the information needed to resolve their own tax affairs.
Is Sintra Global final?
No. Permission to appeal to the Supreme Court has been granted (UKSC 2026/0011). Until that appeal is determined the Court of Appeal decision binds the tribunals, but the position may change. Advisers with live appeals turning on the point should consider a stay or at least preserving the argument on the record, and should record the uncertainty in any written advice.
Does HMRC still have to prove deliberate behaviour?
Yes. Sintra Global concerns the underlying tax liability, not the behaviour category. HMRC must still establish that the conditions for the penalty are met, including whether the inaccuracy was careless or deliberate, applying the subjective test in HMRC v Tooth [2021] UKSC 17 and Auxilium. Expect HMRC to argue for a wider reading; it should be resisted.
Does it change the reasonable excuse position?
No. The Perrin v HMRC [2018] UKUT 156 (TCC) framework is unaffected. HMRC must show the penalty was properly imposed; the taxpayer then establishes any reasonable excuse on the balance of probabilities, applying the four-stage approach. That allocation predates and is unaffected by Sintra Global.
What should I do differently in a penalty appeal now?
Build a positive evidential case on the underlying liability rather than putting HMRC to proof on it. Separate out in the grounds which issues HMRC must prove and which the appellant accepts it must prove. Where records are genuinely unavailable, common where a company has been dissolved or an officer is pursued personally, put evidence of that before the tribunal rather than leaving the gap unexplained.