Corporate VAT penalties imposed on director
HMRC can issue VAT assessments and penalties to directors using the personal liability notices (PLN), and will do so particularly where the limited company is in danger of being liquidated.
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Much appreciated
Directors do seem to assume the sticky stuff can only land on and dies with the company
I think HMRC often feed these into the public psyche to help ensure compliance, the bar is still set pretty high on invoking these notices, in basic terms, you really need to take the p*ss before they press them. We had a customer go bust and initial threats of this soon disappeared as although he owed a shed load of money to everyone inc HMRC, he was basically inept as opposed to dishonest. I think it's a nice myth they roll out and I'd imagine they get a bit more paid with it and leave the rest of us saps well back in the queue.
I suppose it's what threshold is applied and how devious the behaviour has been is perhaps subjective, my point was that for the average person running a business honestly and that business failing, assuming honest accounting, it is unlikely that a PLN would be the first issue they'd have.
I used "often" and as this qualified my view but it is no different than HMRC investigating a medical practice on a certain street and suddenly everyone on that street hurriedly "tidying" their affairs. It makes good business sense.
the beauty of a comments section is the forum for alternate views
It seems to me that Azam Ali was foolish to ignore the warning signs of not brokering some kind of agreement with HMRC to reduce the quantum and the penalty via ADR. The liquidator negated all hope of any kind of settlement when the company was put into liquidation, thereby extinguishing the right of appeal and the right of ADR. The HMRC VAT assessment seems to be a typical HMRC 'telephone number assessment' which was probably capable of being challenged via ADR by bringing in the various government departments such as VAT, corporation tax and PAYE. It may be the case, although only an assumption on my part, that wages were being paid for from the suppression of sales and ADR may have provided some scope for reducing the corporation tax liability and ascertaining if there were any flaws with the VAT assessment. It is interesting to note that ADR was successful with regard to Azam Ali's personal tax liability which suggests that HMRC were satisfied that he was not creaming off the money for himself although the tribunal does not comment further on this point. However, many directors believe they can walk away from a debt and this appeal highlights that they are unable to do so.