In Munatsi Logistics Ltd v HMRC TC0653, the First Tier Tribunal (FTT) rejected an appeal against HMRC’s decision to refuse the appellant registration under the Money Laundering Regulations 2007.

Under the Money Laundering Regulations (MLR), businesses operating in the regulated sector, including accountants and bookkeepers, must be registered. If they are not a member of a suitable professional bod, they must be regulated by HMRC.

Munasti Logistics Ltd (Logistics) applied to HMRC for registration under the MLR. This was refused, following a review, on 8 April 2016. This was because its sole director, Mr Munasti (Munasti) was not (in their opinion) a “fit and proper person”, as envisaged under the legislation.

The FTT noted that the burden of proof was on HMRC to show this.

HMRC’s argument was based on the facts that Munasti’s 2010/11 and 2011/12 tax returns had been the subject of enquiries and he was charged penalties for “deliberate inaccuracy” that he had not challenged. They also noted that Munasti had not applied appropriate due diligence and procedures in his previous (registered) sole trade.

Munasti (representing himself/Logistics) argued that he had been disorganised and made erroneous assumptions, resulting in the under declarations, rather than deliberately omitting income, and the lack of challenge on the penalties was because he thought them fair and that it would not be cost effective to challenge the decision.

The FTT accepted Munasti’s argument that the errors were not deliberate. However, in not realising that significant sums had been omitted from his Return, Munasti had made a “serious dereliction of his responsibilities as a taxpayer” and his “lack of care … fell well below what would be expected of a reasonable taxpayer”.

It also noted that Munasti had been improving his knowledge and systems, but the FTT did not believe he was yet at a stage where they could resist HMRC’s argument that he was not a fit and proper person. However, he was likely to reach such a stage if he continued his learning and appreciation of systems.


HMRC revealed that they had made their decision by reference to an internal “risk matrix”; the FTT suggested it would have been beneficial to have revealed the documents at the tribunal.

The FTT noted that HMRC’s decision making process (re the “fit and proper” test) “still does not pay due regard to the spirit of the recommendations made in the Tribunal’s decision Hunt” from 2014 (which related to rehabilitation).


Munatsi Logistics Ltd v HMRC [2017] UKFTT 0617 (TC) 

Money Laundering Regulations: Accountants' Registration

Michael Hunt v HMRC TC04183

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