In Mr Kamraan Hussain v HMRC [2019] TC 7325, the First tier tribunal upheld a director’s personal liability notice (PLN) for inaccuracy penalties for two VAT quarters but cancelled it for a third period.
The company traded in mobile phones, and later in electronic communication services (ECS), both of which are often involved in missing trader fraud .
- Penalties for inaccuracies were incurred for three VAT quarters.
- The company went into liquidation with the VAT unpaid.
- The PLN was served on the director on the basis that he knew, or should have known, that the transactions were connected with fraud.
For the first of the three periods, the tribunal held that the director’s actions were careless, but not deliberate as required for a PLN. So, the PLN was cancelled for that period.
For the other two periods, HMRC had specifically drawn the director’s attention to its concerns. They had provided notices and asked detailed questions. The director’s answers lacked credibility and consistency, from which the FTT concluded that his conduct was deliberate and upheld the PLNs.
Comment
Two additional points are worth noting about this case.
Firstly, HMRC asked the tribunal to rule that the director’s appeal was too late as the 30-day notice for the company appeal had passed. The tribunal said that the PLN had, in effect, triggered a fresh 30-day limit.
Secondly, the director had offered a payment to HMRC, without admitting liability, to make the issue go away. The tribunal held that this offer did not affect its decision either for or against the director.
Links to our guides:
Penalties: Errors in Returns and Documents (subscriber version)
Reverse charge & missing trader fraud (MTIC)
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