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Bhandal v The Commissioners for HMRC [2020] Master Nagalingam, SCCO

In Bhandal v The Commissioners for HMRC [2020] Master Nagalingam, SCCO, 12.06.20 the Claimant had been ordered to make a payment on account of costs payable of £150,000 by a specified date, but had failed to do so.  The Defendant receiving party had issued an application seeking an unless order on the terms that the Claimant be debarred from the detailed assessment proceedings if payment of costs due, for the payment on account and an earlier summary assessment of costs, was not made.  The parties were able to resolve that application by consent, and an Order was made that the Claimant make payment by a specified date or else he be debarred.  Master Nagalingam noted that had HMRC’s application come before him that he “would have had no hesitation in allowing the Claimant no more than 14 days to make the outstanding payments”.

The Claimant did not make payment by the date within the consent order, and applied just after the time to make payment for a stay of the Consent Order, a variation or stay of the Order and for relief from sanctions.  The Claimant set out that there was an intended private prosecution against a former officer of the Defendant and the Defendant, arguing if such was successful it lead to consequences that meant it was inappropriate and disproportionate for the assessment to take place before the intended private prosecution was heard.

The Claimant sought to rely on Riordan v Moon Beaver [2018] EWHC 1452 (QB), and argued that the intended private prosecution had met the ‘Full Code Test’ with such amounting to a material change in circumstances after the unless order was agreed, such that; the Claimant did not then make payment pursuant to the unless order, relief from sanction should be granted and the assessment proceedings should be stayed.

The Master noted that “the Claimant seeks relief on terms that he be permitted to continue to effectively ignore the orders requiring costs payments to be made to the Defendant and regardless of whether the detailed assessment proceedings are stayed or not.”  Riordan was not applied as the application there was made before any breach occurred, there was also permission to apply in that case as the sanction for non-payment there meant an end to the assessment proceedings.  The Defendant’s approach in seeking to debar the Claimant (rather than strike out the Points of Dispute or similar) was a measured sanction, the breach was serious and significant (with the Claimant wilfully ignoring Orders for several years) and the application for a stay did not excuse the breach of the Consent Order.

The Claimant’s stay application was refused due to various reasons, including; delay, the time the Defendant had been deprived of their monies, there was no risk of the Claimant not being able to recover from HMRC if there was ever any later successful compensation claim or second appeal, the Claimant’s Points of Dispute would be considered upon assessment, the court would not “second guess” the outcome of any private prosecution without sight of convincing evidence, and it was held there was no material change in circumstances.

A&M Bacon were instructed by the successful receiving party in this matter, the judgment showing the courts will not tolerate breaches of Orders and unreasonable delays upon assessment – being crucial for a receiving party’s cashflow.

Contact A&M Bacon here



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