Liability to an excise civil evasion penalty: burden and standard of proof
Burden of Proof
Section 16 (6) (a) of the Finance Act 1994 provides that the burden of proof of liability to a Section 8 civil evasion penalty lies upon the Commissioners.
The burden of proof in respect of all other matters, including mitigation of the penalty, is upon the trader. However, if an appellant produces evidence to show that a larger reduction by way of mitigation should have been made, it would then fall to the Commissioners to satisfy the tribunal that such evidence does not give rise to the further reduction claimed by the appellant. It is important therefore, that the discretion to mitigate is exercised in a proper manner.
Standard of Proof
The standard of proof required in civil cases is proof on a balance of probabilities.
Confusion has arisen from certain civil cases where Judges, lawyers or other commentators have talked of requiring a ‘high degree of probability’ for example, in Ghandi Tandoori Restaurant (LON/88/369Y).
In the appeal by Ghandi Tandoori Restaurant (LON/88/369Y), the tribunal chairman considered what standard of proof should apply and concluded
‘… we can see no reason why that standard [balance of probabilities] should not apply in cases such as this. Because the issue of dishonesty by the taxpayer arises and because the consequences of a finding of dishonesty give rise to potentially severe penalties, we consider that we should not be satisfied with anything less than a high degree of probability.’
This has led some to conclude that there is a further or intermediate standard of proof in the more serious civil cases. However, this is a misinterpretation of the true legal position.
Advice is that in the more serious civil cases the nature, quality and weight of evidence to satisfy the civil standard of proof (that is, tip the balance of probabilities) is commensurably increased. Amongst these more serious cases are those where dishonesty has to be proved, such as Excise civil evasion cases. Extra evidential ingredients are then required to tip the balance of probabilities because an act involving dishonesty will, in the nature of things, be improbable of a normal person.
This advice is consistent with the judgements made in the Court of Appeal Case of Mohammed Siddiq Khan v HMRC  EWCA Civ 89, CA which cited from Re H  AC 563, HL:
Balance of probabilities - in applying this civil standard of proof we have to take into account the seriousness of the allegation. So, when assessing probabilities the court will have in mind that the more serious the allegation, the less likely the event occurred and hence the stronger should be the evidence, before the court concludes that the allegation is established on the balance of probabilities.
The decisions make it clear that there is no intention for a further or intermediate standard of proof to be applied.