Mini Umbrella Company Appeal Outcome

Following the decision in the case of Elphysic Ltd and others v HMRC [2024] UKFTT 291 which was released in March 2024, both parties appealed the outcome to the Upper Tribunal (“UT”). 

On 17 July 2025, the UT issued a Decision in the Lead Appellants’ appeals.

The Appeals of the Lead Appellants on the FTT’s finding of fraud affecting the Flat-Rate Scheme and entitlement to Employment Allowance were dismissed. The Appeal of HMRC on the de-registration point was upheld.

See the full case here.

See our news on the original decision here. 

The UT found that it was not necessary to show that the Lead Appellants knew or should have known of fraud, in order to cancel their VAT registration. The Ablessio principle requires no more than showing the existence of a fraudulent or otherwise abusive scheme.

The UT accepted that a party who is alleging fraud must state it clearly and unambiguously in a pleading and provide full particulars and that there must be no room for doubt as to whether an allegation of fraud or dishonesty is being made.

The UT rejected HMRC's submissions that it had sufficiently pleaded its case, or set out in evidence, the identity of the perpetrators of the fraud. However, the UT found that HMRC’s statement of case was clear that the scheme as a whole was fraudulent.

Whilst acknowledging the deficiencies in pleadings, the FTT's reliance on the cumulative effect of making inferences from the facts relied on by HMRC did not constitute an error of law. 

Aspire Comment

It remains to be seen whether the Lead Appellants will make an application to appeal the decision to the Court of Appeal.