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Director ordered to pay £232k in NIC and interest

HCL Equipment Contracts Limited’s liability to pay class 1 NIC on employees’ earnings was transformed into a personal liability of the director when the company went into administration.

6th Nov 2020
Tax Writer
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HCL EQUIPMENT CONTRACTS LTD: Quarrying of ornamental and building stone, limestone, gypsum, chalk and slate and Renting and leasing of agricultural machinery and equipment
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David J Unwin was a director at HCL Equipment Contracts Limited (HCL). The company’s accounts for the year ended 31 December 2011 shoed an average of 55 employees and a tax creditor headed “taxes and social security costs” of £699 per week, which solely related to unpaid PAYE and NIC.

In 2010/11, the workers had been paid net of PAYE and NIC, but HCL had made no payments of PAYE or NIC to HMRC. The company had also filed a nil employer return (form P35) for that year.

Employees or agency workers?

Unwin argued that HCL had transferred its employees to a related party, Caledonian Mining Ltd (CML) and that CML had also provided agency staff for particular projects. As a result, any liability for employee deductions was that of CML.

Unwin also stated that the employment figures in the company’s accounts included agency staff, and asserted that the tax creditor related to VAT, not NIC.

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Replies (4)

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By Mr J Andrews
09th Nov 2020 10:39

Definitely an UN WIN case here and always good to read of HMRC coming up with the goods where wasters are involved.
But just the back NIC plus interest ? Law breaking under different circumstances would command a term at Her Majesty's pleasure.

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Replying to Mr J Andrews:
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By rbw
09th Nov 2020 13:21

I'm no lawyer but the sentencing guidelines for theft assuming high culpability ("Breach of a high degree of trust or responsibility") and category 1 (above £100,000) have "Starting point 3 years 6 months’ custody". And I'd hope to see a confiscation order on top of that.

I'd like to see more. Perhaps the IoD et al should put in "victim statements" on the harm such people do to the case for limited liability.

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By cfield
09th Nov 2020 11:08

Couldn't give details? No documentary evidence? Sounds like he's been advising Trump.

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By Ian McTernan CTA
09th Nov 2020 11:42

Excellent result for HMRC, it's just a shame it takes them so long to uncover issues like this.

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