Director Loses Appeal Against HMRC’s £590k Tax Notice

A director of a technology company lost the appeal against several notice of requirements (NoRs) issued by HM Revenue and Customs (HMRC). The tax authority issued a security payment of £590,000 due to unpaid taxes related to the company’s PAYE and National Insurance Contributions (NICs).

What Is the Timeline of the Case?

HMRC stated that both the director and the company were liable for a tax payment of £585,109, which includes £310,210.41 of PAYE (Pay As You Earn) and £274,899.29 of National Insurance Contributions (NIC). The tax authority issues the notice under Part 4A of Income Tax (Pay As Your Earn) Regulations 2003 (PAYE Regulations) and Part 3B of Schedule 4 to the Social Security (Contributions) Regulations 2001 (NICs Regulations).

HMRC warned the director and the company about the notice of requirements (NoRs) in February 2022. After some discussion, the company promised to pay as a £1.7 million investment was on its way, so HMRC decided to hold off and was open to a time to pay agreement (TTP).

As the investors pulled out, HMRC issued the NoR stating that both the director and the company would have committed a criminal offence if they did not pay the liable amount by 13 August 2022. Then, the director and the company were notified that HMRC was intending to pass the case to the Crown Prosecution Service (CPS) in November 2022.

The director and the company were ordered to appear at the Croydon Magistrates Court on 23 March 2023.

Why Was the Appeal Rejected?

The director appealed against the NoR for both himself and the company. However, both were rejected as there was no reasonable excuse for appealing late.

Here is a breakdown of why the appeal was rejected:

• The director submitted the appeal against the NoR more than six months late. And there was no reasonable excuse for appealing late.
• HMRC argued that the large amount of unpaid taxes posed a significant risk to revenue. The tribunal agreed with HMRC.
• The company was applying for tax credits to cover the security payment. However, these claims were not guaranteed.

Due to these reasons, the application to bring a late appeal was dismissed by the tribunal.

Conclusion

The director of a company and the company were liable for unpaid taxes relating to PAYE and NICs. Even though HMRC provide them ample time to complete those payments, they failed to do so. This resulted in HMRC issuing notice of requirements (NoRs).

The director represented himself and the company to appeal the decision in a tribunal. However, the appeal was dismissed by the tribunal on multiple grounds.