Manacled by agreement

Whether liability is excluded by undertaking

The company was incorporated in 1998 and ceased trading in 2005. In August 2006 the company agreed to make retrospective payments of wages and salaries and for a bonus to be paid to the director and his brother. It did not account for PAYE or National Insurance on the sums and the payments were not included in the brothers’ tax returns.

HMRC opened enquiries into the company’s accounting periods between August 2003 and January 2005 and these were closed in 2011. It also enquired into the personal tax returns of the director and his brother. These were closed in 2007. As part of an agreement reached in July 2007 the company said it entered into a binding agreement with HMRC that no PAYE or National Insurance would be demanded on the bonuses.

The company was struck off the register and dissolved...