Podstreshnyy v Pericles Properties: the serious consequences of disobeying disclosure orders
The recent judgment in Podstreshnyy v Pericles Properties Ltd  sends a clear message as to how seriously the UK courts take the deliberate breach of disclosure orders made in the context of freezing orders.
In Podstreshnyy, the claimant claimed against the defendants for rent received and said to be held on trust for the claimant, who had employed the defendant agency as its letting agent. In February 2018 freezing injunctions were granted requiring the defendants to disclose details of their assets in England and Wales. The defendants were ordered not to dispose of, deal with or diminish the value of any of their assets to the value of £100,000. Judgment was subsequently entered against the contemnor in the sum of £112,452.40.
Committal applications for contempt were submitted when the contemnor failed to provide disclosure of information, in breach of the Court orders, and failed also to disclose ownership of three properties. The application alleged that the contemnor had breached the Court’s orders by marketing two of the three properties for sale without both notifying the claimant of the existence of the properties and of the attempts to sell them. The applicant also alleged that the contemnor failed to make an interim payment of costs of £5,000 and made withdrawal of more than £60,000 from her accounts during the period of the freezing orders.
The Court held that there had been a clear failure by the contemnor to disclose ownership of the three properties, sources of income and bank accounts, or to make an interim payment of costs in the terms ordered. While the Court was unconvinced that steps taken to market properties amounted to dealing within the terms of the freezing order - the marketing steps had fallen short of formal acts, such as the appointment of solicitors or the sending out of contracts for sale – and held that a failure to make an interim payment of costs as ordered was not obviously contempt, the contemnor’s withdrawal of £60,000 was, however, significant in the context of the amount of the claimant’s claim.
In its judgment, the Court outlined the guidelines for the imposition of a custodial sentence: it upholds the authority of the court and underlines the significant public interest in ensuring that court orders are obeyed. Of the sanctions available, and while imprisonment was always the last resort, the contemnor’s breaches had been serious and deliberate, with the intention of depriving the claimant of the money to which he was entitled. Taking account of mitigating factors, which included increased disclosure, an admission, an apology, a willingness to co-operate and the care of a dependent child, the Court concluded that a custodial sentence of nine months was appropriate.
The message from the Court following this case is clear: if a freezing order of the Court is breached, a contemnor does so at his or her own risk and may face imprisonment for doing so. After all, a contempt of court is, in the words of Mr Justice Norris in 2015, “not a wrong done to another party in the litigation. It is an affront to the rule of law itself and to the court”.
Increased Investment in Personal Tax Compliance in the UK (Published in Thought Leaders 4 Private Client)
Advances in technology and increased international fiscal co-operation have made global personal tax compliance initiatives pop up in abundance in recent years. To compound the issue, the Russian invasion of Ukraine and the corresponding economic fallout prompted domestic governments to increase transparency in relation to investments held by wealthy foreign individuals (with a focus on oligarchs).
In the UK, in the context of the cost-of-living crisis, public opinion certainly seems to be in favour of increased accountability for high-net-worth individuals (eg, on 9 October 2022, 63% of Britons surveyed thought that “the rich are not paying enough and their taxes should be increased”).1
HMRC is one of the most sophisticated tax collection authorities in the world and the department is making significant investments in technology in the field of compliance work; they are well placed to take advantage of new international efforts to increase tax compliance, particularly considering the already extensive network of 130 bilateral tax treaties in the UK (the largest in the world).2 The UK was also a founding member of the OECD’s Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) forum.
This article discusses the main developments in support of the increased focus on international transparency and personal tax compliance in the UK. There are other international fiscal initiatives, particularly in the field of corporate taxation, but such initiatives are beyond the scope of this article.
It should be noted that a somewhat piecemeal approach, with constant tinkering makes compliance difficult for the taxpayer and is often criticised for lacking the certainty that a stable tax system needs to thrive.
This article was first published with ThoughtLeaders4 Private Client Magazine
Tax-Related Measures in the Autumn Statement 2022
On 17 November 2022, the Rt Hon Jeremy Hunt MP, the Chancellor of the Exchequer, unveiled the contents of the Autumn Budget 2022. This comes after the International Monetary Fund (IMF) published its world economic forecast on 11 October 2022. The IMF expects the British economy to grow 3.6% in 2022 and 0.3% in 2023. Other major developed economies are also expected to stagnate next year, namely Spain (1.2%), the US (1.0%), France (0.7%), Italy (-0.2%) and Germany (-0.3%).
This note focuses on tax measures included as part of that statement.
Offshore Structures and Onward Gifts
The so-called “onward gift” tax anti-avoidance rules were introduced by the Finance Act 2018 to complement the changes brought in the previous year aimed at restricting the UK tax privileges afforded to non-UK domiciled individuals. The rules were designed to close some perceived loopholes in relation to the taxation of non-UK resident structures (including but not limited to non-UK trusts). With effect from 6 April 2018, it would no longer be possible for an individual to receive a gift without questioning its providence, particularly where family trusts are involved.
The rules were designed to prevent non-UK structures from using non-chargeable beneficiaries as conduits through which to pass payments in order to avoid tax charges. Gone are the days of “washing out” any trust gains that could be matched to offshore income or gains by prefacing a payment to a UK-resident taxable beneficiary with a non-taxable primary payment to a non-UK resident beneficiary.
“It is notoriously challenging to prove a negative (especially to HMRC) and even more tricky where the taxpayer must speak to someone’s intention other than their own.”
Note that the new rules will apply where funds are received from non-UK resident structures before 6 April 2018 to the extent that they are subsequently gifted after that date.
Increased Investment in Personal Tax Compliance in the UK
Changes in public opinion, advances in technology and increased international fiscal co-operation have made global personal tax compliance initiatives pop up in abundance in recent years. In addition, the Russian invasion of Ukraine and the corresponding economic fallout have prompted governments to increase transparency in relation to investments by wealthy foreign individuals in their countries.
The UK’s HMRC is one of the most sophisticated tax collection authorities in the world and the department is making significant investments in technology in the field of compliance work.
It should therefore be well placed to take advantage of new international efforts to increase tax compliance, particularly against the backdrop of the already extensive network of bilateral tax treaties in the UK, and not forgetting that the UK was a founding member of the OECD’s Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) forum.
This article discusses the main developments in support of the increased focus on international transparency and tax compliance in the UK. There are other international fiscal initiatives, particularly in the field of corporate taxation, but such initiatives are beyond the scope of this article.
Case note: Lynton Exports (Alsager) Ltd v Revenue and Customs Commissioners  UKFTT 00224 (TC)
As HMRC continue to apply the Kittel principle to increasing numbers of industries and businesses, taxpayers need to be vigilant about evidential requirements that HMRC must fulfil in order to discharge their burden of proof. Read JHA’s latest insight into the First-tier Tribunal’s decision in Lynton Exports (Alsager) Ltd v Revenue and Customs Commissioners  UKFTT 00224 (TC).
If you require any further information about the Kittel, Mecsek, and Ablessio principles, or any other allegations by HMRC of fraud or fraudulent abuse, please contact Iain MacWhannell (firstname.lastname@example.org).