In Pugsley & Anor v DPP [2022] EWHC 425 (Admin), the Divisional Court considered an appeal by way of a case stated against the refusal of a district judge to stay a prosecution as an abuse of process. There seems to be an increased appetite to prosecute taxpayers for non-payment of VAT securities and this recent case serves to highlight key points for the professional advisor.

In Pugsley, a sole director (Stephen Pugsley) and his company (Red Lion Hoj) were prosecuted in the magistrates’ court for failing to comply with the VAT security regime, specifically for not paying a VAT security in the amount of £18,232.79, pursuant to the Value Added Tax 1994 (VATA), s72(11).

The individual and corporate defendants both initially entered not guilty pleas. They subsequently argued that they had, through their advisors, properly required HMRC to conduct an independent review of the decision to issue the VAT requirement as HMRC had made that offer and, as that had not occurred, it was an affront to justice to be prosecuted for non-payment.