We previously wrote a short article about Deliberate Penalties for knowingly submitting incorrect tax/VAT returns.

We recently, and successfully, represented a director of a company in the building industry who received just such a Deliberate Penalty. His company was liquidated owing HMRC £462,961 of VAT and he received a Personal Penalty of approximately £220,000. The alleged debt arose due to an inputting error, but HMRC believed that the error was so large the director must have known and, therefore, it was deliberate.

In fact, the director disputed the Assessments when corresponding with HMRC at the time they were raised, but did not appeal them to the Tax Tribunal. Instead, he simply allowed the company to be wound up by HMRC as he didn’t believe it could affect him personally.

If a company doesn’t appeal the Assessments, those Assessments cannot be challenged during a later appeal of the Personal Penalties. It makes the argument that you didn’t know much harder to win because you are technically accepting that the tax debt is genuine. It is important to appeal any HMRC decision that you disagree with if they are connected to a personal penalty.

If the company is in liquidation, you will need to ask the liquidator, or Official Receiver, for permission to appeal an HMRC decision.

If you receive the Personal Penalties after the 30-day period allowed to appeal the Assessments, you can still appeal the Assessments ‘Out of Time’ and we have written articles on ‘out of time’ appeals which can be viewed on this website.

The successful Tribunal appeal on the above Personal Penalty can be viewed here: Ioan Popa Tribunal Appeal.

It was the culmination of careful legal argument and thorough preparation of the witnesses. Both of these are crucial to ensure the full facts are presented clearly and that HMRC’s case is properly scrutinised.

Please call Liban Ahmed on 0345 557 0005 if you have any questions regarding this article.