NDP’s Tax and Insolvency Litigation Solicitors Successfully Oppose a £668,000 Claim by HMRC Against our Director Client.
Litigating in the Tax Tribunal is specialist work that our insolvency litigation solicitors are well used to dealing with, here at NDP. This is the story of how we successfully opposed a potentially ruinous £668,000 claim by HMRC against our director client.
Background to this HMRC Claim
The company of which our client was the director went into voluntary liquidation in April 2016. HMRC raised penalty assessments against the company, post liquidation, claiming from the company £668,000.
HMRC then issued a Personal Liability Notice (‘PLN’) against the director personally, claiming from him the liability assessed by it on the company of £668,000, being 100% of the penalty assessed on the company.
On What Basis Could HMRC Make the Personal Claim Against the Director?
It is, perhaps, not widely known amongst directors of limited companies, especially in the SME sector, that HMRC in defined circumstances has the legal right to pursue a director personally, for money owed to it by the company.
Paragraph 19(1) Schedule 24 of the Finance Act 2007 permits such a personal claim to be made. To succeed in such a claim, HMRC must demonstrate ‘deliberate inaccuracy which was attributable to an officer of the company’.
Our Tax and Insolvency Litigation Solicitors are Instructed
Having received the PLN for what to him was a potentially life changing amount of money, the director sought advice from NDP’s insolvency litigation solicitors specialising in this area of work.
The options available to the director were to:
- Seek an independent review of HMRC’s decision to issue the PLN, or
- Appeal to the independent First Tier Tax Tribunal (‘FTT’).
The latter option was chosen. With a window of only 30 days to make that Appeal in time, we had to work fast.
A clear plan was agreed upon with our director client, which we then implemented with the assistance of specialist Tax Counsel. A robust Appeal was lodged against the PLN issued to the director in quick time, which involved a lot of work in getting up to speed with the full factual background to matters, going back over several years. Our team was fully up to the task, working around the clock to hit the deadline.
A Successful Outcome – An End to the Director’s Nightmare
HMRC were ordered by the FTT, as part of the Appeal process, to respond to the Appeal by a date in August 2018. HMRC failed to meet that deadline and in the following days wrote to NDP confirming that HMRC would not be opposing the director’s Appeal to the Tribunal.
The nightmare for the director client thus ended, effectively saving him from HMRC’s claim for £668,000. We now seek answers from HMRC as to how and why this PLN came to be issued in the first place. We also seek payment of the client’s legal costs from HMRC.
Our Client was Delighted
Our client commented on the outcome:
“My first meeting with Neil Davies and Gulshan Kumar gave me great confidence that I would be listened to and that a positive outcome could be achieved for me, in the face of enormous financial claims from HMRC, which I believed to be ill-founded and wrong.
They, along with the specialist Tax Barrister they introduced to the case, worked closely and efficiently to draft a very compelling Appeal document on my behalf. They left me in no doubt of the evidential mountain we had to climb to succeed in the Appeal, working closely together, we did precisely that.
HMRC dropping their claims against me has removed an enormous cloud that has hung over my family for too long. I can now get on with my business and my family life free of these claims.
The NDP Team and Counsel were professional and ruthless in successfully defending my position. I cannot recommend them highly enough.”
Contact us for Help and Advice with Insolvency Claims, Including Claims from HMRC
Our tax and insolvency litigation solicitors are experts in defending claims made against directors, whether they are claims from HMRC or from the liquidator. Across our Team of 10 lawyers, we have long experience of this area of law and a strong track record in significantly reducing amounts claimed, or removing liability entirely, as in this case. Click here to some more testimonials.
If you are threatened with a claim from HMRC, please contact us or call us on 0121 200 7040 for a free initial discussion. No hole is too deep for us to make a difference.