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Success in opposing HMRC application for an Account Freezing Order

Richard Padley represented FI at Folkestone Magistrates’ Court at an application made on notice by HMRC for an account freezing order in respect of FI’s bank account. FI are an alcohol wholesaler which HMRC believed traded in such a way as to provide suspicion of been involved in an alcohol diversion fraud. Over £8m was moved through the accounts of FI which was suspected to form part of a money laundering arrangement and evidence of ‘layering’.


A significant amount of paperwork was collated in the short space of time between been notified of the hearing and the date set for the application to be heard, with full written submissions made opposing the application contending that there could be no reasonable grounds to suspect that the funds in the account could constitute realisable property. That paperwork included extensive due diligence in relation to the trading partners of FI that had been collated and provided to HMRC over a number of years. 

At the hearing HMRC’s financial investigator was cross examined as to the nature and extent of the investigation undertaken prior to the application been made to the court. This highlighted clear deficiencies, including failures to check the appropriate companies register. GB, the operator of FI, gave evidence of his extensive dealings with HMRC and the due diligence he had undertaken as to his trading partners. 

The court concluded there were no reasonable grounds to suspect the funds were realisable and dismissed HMRC’s application. Further the court granted an application for costs against HMRC citing the poor investigation that should have led to the matter been resolved without the need for a court hearing.