In S D Raithatha (As Liquidators of Halal Monitoring Committee Limited) v M N A Baig & Ors [2017] EWCH 2059 (Ch), the High Court found the Directors were personally liable for VAT debts due to a failure to register for, and charge, VAT.

The assessment was not paid due to lack of funds and HMRC petitioned for the winding up of the company as insolvent.

The Liquidator claimed the Directors breached their duty of care, skill and diligence owed to the company and should be personally liable:

The Directors appealed:

The High Court agreed with the Liquidator, despite acknowledging that it seemed harsh on the incoming directors:

Whilst the Hight Court agreed the Directors were not required to obtain special knowledge of all matters, they should have asked if there was an exemption rather than assume and should not have relied on the silence of the accountant.

The Directors were found to have lacked care, skill and diligence. They may have acted honestly, but needed to act reasonably as well and they did not. The Directors were found to be liable for VAT arising after a meeting with the accountants in January 2010, but not before this date.

Links

Registering for VAT

External link:  S D Raithatha (As Liquidators of Halal Monitoring Committee Limited) v M N A Baig & Ors [2017] EWCH 2059 (Ch)