Febrey v Revenue & Customs (INCOME TAX/CORPORATION TAX : Other) [2018] UKFTT 764 (TC) (20 December 2018)

Febrey v Revenue & Customs (INCOME TAX/CORPORATION TAX : Other) [2018] UKFTT 764 (TC) (20 December 2018)

The Tribunal found that the appellant had no employment income from Febrey Limited for 2005/2006 and 2006/2007; the amounts drawn were not employment income but related to dividends or loans. For 2007/2008, the appellant did receive employment income but in an amount much less than £300,000. The Company failed to deduct PAYE and NICs for that year, but the failure was not wilful and the appellant had no knowledge of it. Therefore, the Discovery Assessments and Directions do not apply for 2005/2006 and 2006/2007, and do not apply for 2007/2008 as the statutory conditions are not met.

Citation
[2018] UKFTT 764 (TC)
Parties
Appellant: Michael John Febrey; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
20 December 2018
Procedural Posture
Income Tax/corporation Tax Appeal / First Tier Tribunal Rehearing After Remittal From Upper Tribunal
Outcome
Appeal allowed
Legal Topics
Income Tax, National Insurance Contributions, PAYE, Discovery Assessments, Personal Liability of Directors
Tax Law Income Tax National Insurance Contributions PAYE Discovery Assessments Personal Liability of Directors

Case Brief

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Parties

Michael John Febrey

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Income Tax/corporation Tax Appeal / First Tier Tribunal Rehearing After Remittal From Upper Tribunal

Legal Issues

  1. 1 Whether the appellant received employment income from Febrey Limited for tax years 2005/2006 and 2006/2007
  2. 2 Whether the Discovery Assessments for those years are valid and in time
  3. 3 Whether the appellant is personally liable for under-deducted PAYE and underpaid NICs under the relevant Directions and decisions for 2005/2006, 2006/2007, and 2007/2008

Ratio Decidendi

The Tribunal found that the appellant had no employment income from Febrey Limited for 2005/2006 and 2006/2007; the amounts drawn were not employment income but related to dividends or loans. For 2007/2008, the appellant did receive employment income but in an amount much less than £300,000. The Company failed to deduct PAYE and NICs for that year, but the failure was not wilful and the appellant had no knowledge of it. Therefore, the Discovery Assessments and Directions do not apply for 2005/2006 and 2006/2007, and do not apply for 2007/2008 as the statutory conditions are not met.

Court Disposition

Appeal allowed

Orders

  • Discovery Assessments for 2005/2006 and 2006/2007 are not valid and are set aside.
  • Directions and decisions making the appellant personally liable for under-deducted PAYE and underpaid NICs are set aside.