In Charles O’Rorke v HMRC [2017] TC6008, the First Tier Tribunal (FTT) upheld an assessment that a director was negligent so personally liable for the company’s NIC bill.

  • Charles O’Rorke FCCA was Finance Director of L Wear Limited, a company purchased out of administration in April 2006.
  • It traded until March 2007 before being put into liquidation. During this period O’Rorke prioritised payments to staff and suppliers over HMRC. 
  • HMRC originally alleged fraud. They downgraded this to negligence and raised a Personal Liability Notice on O’Rorke, making him personally liable for the company’s unpaid NIC.

The former director appealed.

Defences advanced were that:

  • O'Rorke was mentally ill at the time he worked for L Wear so could not have been negligent
    • The key question is whether negligence is a subjective or objective test
    • The FTT considered the question twice before the hearing, getting different results
    • The Upper Tribunal ruled the test was objective, so O’Rorke’s state of mind was not relevant
  • The length of time between the events and the tribunal was in breach of his human rights
    • The FTT considered that there had been no unreasonable delay as the case was procedurally active throughout
    • It did not rule on whether the Human Rights Act was actually in point
  • O’Rorke acted in the best interests of the company and shareholders by paying employees and suppliers in preference to HMRC
    • The FTT held that this was not a viewpoint that could be held by a reasonable person
    • “… such a position verges on delusional”


The decision that negligence is an objective test is interesting: this means that the circumstances and potential mitigations surrounding the suspected negligence are not relevant.


Charles O’Rorke v HMRC [2017] UKFTT 0566 (TC)

NIC: Employers' update