Burne v Commissioners for His Majesty's Revenue and Customs (INCOME TAX and NATIONAL INSURANCE CONTRIBUTIONS (NIC) - company failed to pay tax and NIC - Regulation 72, Income Tax (Pay As You Earn) Regulations 2003 - Regulation 86, Social Security (Contributions) Regulations) [2024] UKFTT 945 (TC) (24 October 2024)

Burne v Commissioners for His Majesty's Revenue and Customs (INCOME TAX and NATIONAL INSURANCE CONTRIBUTIONS (NIC) - company failed to pay tax and NIC - Regulation 72, Income Tax (Pay As You Earn) Regulations 2003 - Regulation 86, Social Security (Contributions) Regulations) [2024] UKFTT 945 (TC) (24 October 2024)

The tribunal found that MB did not receive relevant payments knowing that the company had wilfully failed to deduct and pay PAYE or NIC. The evidence showed MB lost authority after the creditor's administration, did not approve or control the payroll after administration, and did not act wilfully or deliberately. The conditions for transferring liability under Regulation 72(5) and for the Section 8 notice and Section 29 assessment were not met. The appeal was allowed.

Citation
[2024] UKFTT 945
Parties
Appellant: Michael Burne; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
24 October 2024
Procedural Posture
Tax Appeal / First Tier Tribunal Judgment
Outcome
Appeal allowed
Legal Topics
PAYE Liability Transfer, National Insurance Contributions, Director's Liability, Discovery Assessment, Wilful Failure, Insolvency Administration
Tax Law Employment Law Insolvency Law PAYE Liability Transfer National Insurance Contributions Director's Liability Discovery Assessment Wilful Failure +1 more

Case Brief

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Parties

Michael Burne

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal Judgment

Legal Issues

  1. 1 Whether the director (MB) received relevant payments knowing the company wilfully failed to deduct and pay PAYE and NIC
  2. 2 Whether Regulation 72(5) of the Income Tax (Pay As You Earn) Regulations 2003 applies to transfer liability from the company to MB
  3. 3 Whether the Section 8 notice for unpaid NIC and Section 29 TMA 1970 discovery assessment are valid

Ratio Decidendi

The tribunal found that MB did not receive relevant payments knowing that the company had wilfully failed to deduct and pay PAYE or NIC. The evidence showed MB lost authority after the creditor's administration, did not approve or control the payroll after administration, and did not act wilfully or deliberately. The conditions for transferring liability under Regulation 72(5) and for the Section 8 notice and Section 29 assessment were not met. The appeal was allowed.

Court Disposition

Appeal allowed

Orders

  • HMRC's Regulation 72(5) direction transferring PAYE liability to MB is set aside.
  • Section 8 notice for unpaid NIC is set aside.