Director Held Personally Liable for Multi-Million-Pound Missing Trader Fraud

1st March 2022 By

Where a company becomes involved in the fraudulent evasion of tax, the corporate veil will rarely protect its directors from personal liability. An elderly businessman found that out to his cost when he received a seven-figure bill that was likely to plunge him into bankruptcy.

The businessman was the sole shareholder and active director of a limited company that entered into transactions connected to a missing trader intra-community fraud. Following an investigation, HM Revenue and Customs assessed the company for £4,890,631 in VAT. A personal liability notice (PLN) was raised against the businessman in the same amount.

Subsequently rejecting the company’s appeal against the assessment, the First-tier Tribunal (FTT) noted that its turnover had rocketed from about £2,000 in one quarter to over £13 million in the next. Whilst stopping short of finding that the company had actual knowledge of the fraud, the FTT found that it had effectively turned a blind eye to the need for robust commercial due diligence.

Challenging the PLN, the businessman argued, amongst other things, that he had no idea that the company’s trading was suspect. In refusing to grant him permission to pursue his appeal, however, the FTT noted that it had been lodged far outside the relevant statutory time limit. The merits of his case were in any event extremely weak.

The FTT acknowledged that its ruling would have a particularly harsh impact on the businessman. His home would be at risk and he was very likely to be made bankrupt at the age of 75. Given that his appeal had no realistic prospect of success, however, it would be no mercy to permit him to proceed with it.

Source: Concious

Latest News

Award That Requires Borrowing Made Into Court Order

17th May, 2024 By

Disagreements between separating couples all too often result in litigation that substantially reduces the assets available to them, as was illustrated by a case that recently reached the High Court. At issue was whether awards made by arbitrators in financial remedy proceedings can be made into court orders even if that would require one of the parties to borrow money. The couple had previously had a relationship lasting a few years before resuming their relationship in 2015. They had two children before separating again in 2019. Following their separation, the...

Inheritance Disputes – Costs Risks Can Be Reduced

15th May, 2024 By

Arguments about what someone promised before their death can lead to significant legal costs. However, if faced with a claim against the estate, there may be steps the beneficiaries or executors can take to reduce the risks, as a recent High Court case illustrated. A man had left a farmhouse and agricultural land in Cornwall to his wife, with whom he had also jointly owned a neighbouring area of land. After his death, one of the couple's daughters and her husband claimed that he had told them he wanted them...

Share Rounding Error Does Not Prevent CGT Relief

13th May, 2024 By

There are often very specific rules that must be complied with in order to claim tax reliefs, but if a small mistake arises, the courts may be able to provide assistance. In a recent case, the First-tier Tribunal (FTT) found that an investor was entitled to Entrepreneurs' Relief on the disposal of his shares in a company, despite owning one share fewer than he needed to qualify for it. The investor had agreed to purchase 5 per cent of the shares in the company for £500,000. He wished to own...

Wife Entitled to Maintenance Until Sale of Family Home

10th May, 2024 By

When divorcing couples disagree on how assets should be divided, the courts will seek to arrive at a fair outcome for both parties. In deciding how the proceeds of sale of a former couple's home should be apportioned, the Family Court agreed with the wife that she should receive maintenance payments until the sale took place. The couple had married in 2006. Following a brief separation, they had reconciled for two years before finally separating in 2022. The husband and wife both contended that they should be entitled to about...