Tribunal confirms that a joint and several liability notice is a criminal charge

In James Hall v HMRC [2026] UKFTT 124 (TC), the First-tier Tribunal (FTT) held that a joint and several liability notice (JSLN) was a criminal charge for the purposes of Article 6 of the European Convention on Human Rights (ECHR) and that the burden of proof was therefore on HMRC. The FTT also confirmed that it has jurisdiction to consider public law arguments.

Background

James Hall was a director of three companies which each entered insolvency procedures with outstanding tax liabilities totalling £1,687,010.04.

On 2 April 2024, HMRC issued Mr Hall with a JSLN under paragraph 3, Schedule 13, Finance Act 2020, which purported to make him personally liable for the outstanding tax liabilities of the three companies.

Paragraph 3, Schedule 13, Finance Act 2020, was designed to enable HMRC to combat 'phoenixism', where a limited liability entity enters into an insolvency procedure in order to avoid paying its accrued tax liabilities, and then a new entity is established to carry on the same business. This process can be repeated and allows owners of businesses to exploit the fact that as companies are separate legal entities their liabilities cannot generally be passed on to the owners of the business. 

However, under Schedule 13, Finance Act 2020, if certain conditions are met, HMRC can pierce the corporate veil and make specified individuals with an interest in, or control over, the company in question (such as directors or shareholders) personally liable for the company's tax debts. 

Mr Hall appealed the JSLN to the FTT, relying on the following five grounds:

1. HMRC had not proven one of the required conditions.
2. The JSLN was not necessary for the protection of the revenue.
3. Schedule 13, Finance Act 2020, and its application in this case, breached the principle of proportionality.
4. The issue of the JSLN was irrational.
5. HMRC had failed to follow its own guidance when deciding to issue the JSLN.

Before the substantive hearing of the appeal, HMRC applied to the FTT for grounds 3-5 to be struck out on the basis that they were public law grounds and, as such, the FTT did not have jurisdiction to hear them. At the same time, Mr Hall applied for directions requiring HMRC to serve its witness evidence and skeleton argument first, on the basis that the burden of proof rested with HMRC.

FTT decision 

The appeal was allowed.

Burden of proof

The FTT concluded that the JSLN constituted a criminal charge, for the purposes of Article 6 of the ECHR, and therefore engaged the presumption of innocence, meaning the burden of proof was on HMRC to justify the issue of, and continuing need for, the JSLN.

Jurisdiction

On the question of jurisdiction, the FTT held that it could determine public law issues in the context of the present case, because there was nothing in the legislation that precluded it from doing so and the Administrative Court would not have jurisdiction to consider whether the relevant conditions and continuing need for the JSLN were met. As the JSLN was considered a criminal charge, it was necessary for the FTT to be able to consider all relevant facts and law to protect the taxpayer's right to a fair trial under Article 6 of the ECHR.

Comment

This is an important decision because it is the first time the JSLN provisions have been considered by the FTT and it fundamentally changes how disputes relating to JSLN's will be conducted.

Unless HMRC successfully appeal this decision, taxpayers should be able to rely on appropriate public law arguments in appeals against the issue of JSLNs and put HMRC to proof on the issue of, and continued need for, JSLNs.

The decision can be viewed here.