In M J Febrey v Revenue & Customs [2014] TC03530 a director was made personal liable for tax and NICs following a deliberate failure to deduct PAYE and NICs.

  • The director’s company went into liquidation in March 2008.
  • He had built up a director’s loan account and he declared a salary of £300k on his 2007/08 SA return crediting his loan account and claiming that tax had been deducted.
  • He claimed to have a service contract but his company was not aware of it.
  • HMRC made discovery assessments for earlier years.
  • As sole director he had full control of the company.
  • He provided no P60 and gave the Tribunal with no explanation for his company’s failure to deduct tax from the sums shown in the loan account as paid to him.

The tribunal found that there was a deliberate failure to deduct tax on the payments made, and Mr Febrey knew of that failure. The fact that he was not responsible for maintaining the Company’s records, and entrusted that matter to its in-house accountant, availed him nothing.

The case was appealed to the UT and then reheard by the FTT in 2018, who found in the taxpayer's favour.