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Penalty Notice – Successful Appeal Case Study VAT


Penalty Notice – Successful Appeal Case Study

Directors Personal VAT Liability Penalty Notice, £33,332.54

Company known as ARL for anonymity purposes


Mr V was a director of a successful company, ARL, which was trading as a temporary employment agency. Mr V operated the business submitting all tax returns and other legislative requirements on time and accurately.

In 2013, Mr V decided to transfer his staff to a Payroll Services provider. Following this ARL received and paid VAT invoices from the Payroll Services Company and ARL then reclaimed the VAT it had paid as input tax. Unknown to Mr V, the Payroll Services provider subsequently deregistered for VAT.

Following a VAT inspection, ARL received an VAT assessment to tax ARL for the sum of £33,332.54, due to the Payroll Services providers deregistration. ARL submitted a request for review itself to HMRC. These appeals feel on deaf ears and HMRC upheld the decision maintaining the initial assessment.

This caused Mr V’s company significant hardship, and it was no longer able to trade as a going concern and although it disputed HMRC’s decision could no longer effect an appeal. The once successful company, with significant turnover was forced to self-petition bankruptcy, leaving several workers without a job.

Personal VAT Penalty Liability Notice

In December 2015, the company director, Mr V, received a Personal VAT Penalty Liability Notice HMRC for the sum of £33,332.54. He sought legal advice from another firm of solicitors, but their interventions did not alter the penalty he was facing.

Having been referred from another client, Mr V came to see Monarch’s Managing Partner, Shazda Ahmed, who is a former HMRC tax solicitor and prosecutor.

The Personal VAT Penalty Liability Notice provided that the penalty was imposed on Mr V personally as the VAT legislation does allow for this.

Monarch Solicitors, was able to appeal the penalty on the following grounds:

1. No penalty is due because HMRC failed to properly raise a charge against the Company, ARL, and/or to provide the appropriate details of the basis for the inaccuracies they relied upon.
2. If there is no penalty payable by ARL then it could not apply to Mr V.
3. The Director, Mr V had no knowledge of any fraud which has not been set out in any event.

The appeal was based on detailed case law and HMRC knowledge which Monarch Solicitor’s have access to.

The Result:

Whilst the client himself and the previous solicitors could not change the decision to apply a penalty following Monarch’s interventions, HMRC withdrew the personal VAT penalty liability notice and confirmed that they will take no further action against the company director, Mr V.

Amount saved for client: £33,332.54

For more information visit our VAT Disputes page. Alternatively, call our VAT Solicitors on 0330 127 8888 for a free 30-minute consultation on your matter.


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